Previous Money

So, what gives money its value now? "Money is what money does", says John Winchcombe, "and therefore is all to do with trust. If you believe that a banknote has value, it does have value". "A banknote never loses its face value," says Andrew Bailey. "A five pound note will always be worth five pounds. What really makes the value of money go up and down is inflation and the economy, and that's what we call real value." In Argentina, until 2002 one peso was worth one US dollar - it was called the "convertibility system". But a deep recession led to currency devaluation - within less than a month the peso in people's pockets was worth a third of its previous value. Argentina's debts though were still in US dollars. "It was very traumatic, because the government also froze the bank deposits. People knew there would be a devaluation of the Argentine currency, but they couldn't withdraw most of their money," says Florencia Ripani, an Argentinian journalist living in Buenos Aires at the time. BBC News reported on the turmoil of devaluation. Many Argentines have no option but to turn to alternative ways of surviving the devaluation - such as bartering.

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