Numismatic Museum of the Central Reserve Bank of Peru
Foundation of the Lima Mint
Research suggests that primitive “money” circulated in Pre-Hispanic Peru in the form of small copper axes, scallop shells, or coca leaves. These probably had a ceremonial rather than an economic purpose. The first coins in the modern sense (i.e., means of payment and store of value) that circulated in Peru were brought by the Spanish conquerors in 1532. In 1565, 30 years after the foundation of Lima, King Philip II ordered the establishment of the Lima Mint, which started to operate three years later. The creation of a mint responded to the growing pace of business and the importance of mining —especially silver, the raw material for coins.
The first coins minted in Peru are known as macuquinas. The oldest ones (1568) are also known as rincones, after the name of their ensayador, Alonso de Rincón. The ensayador was an official in charge of certifying the weight and fineness of coins. The 16th and 17th centuries were an eventful phase for the Lima Mint. It remained closed for a protracted period of time, during which it was replaced by the Potosí Mint, located in present-day Bolivia, next to the most important silver mines in the Spanish Empire. In 1648, when a scandal involving the adulteration of the silver content of coins surfaced in Potosí (the scandal of the rochunas, as the altered coins came to be known), the design of the coins was reformed and minting resumed in Lima in 1684. The Lima Mint has operated uninterruptedly since then.
Metal Coins in Peru
Macuquinas had irregular edges, as can be seen in these samples. They were made using furnaces, large scissors, anvils, dies, and hammers. Macuquinas were initially made of silver, as most of the world’s coins of the time. For that reason, “silver” sometimes stands as a synonym for “money” (e.g., “plata” in Spanish, “argent” in French). From 1659, the authorities ordered the minting of gold coins, known as escudos. Bimetallic coining carried on in Peru until the first third of the 20th century.
The coins displayed here have been ordered chronologically according to the Spanish kings under whom they were issued. Their denominations are between ¼ and 8 reales. Eight-real coins were known as pesos or patacones. The monetary system was octal, not decimal as today. This room showcases silver and gold coins minted in Lima in the 17th and 18th centuries.
Money in the 17th and 18th Centuries
Compared with today’s money, colonial coins carried a high purchasing power. One real (the monetary unit) was enough for one person to eat during one whole day. Some examples are provided here to have a grasp of the cost of everyday consumption goods in early colonial times. Prices were rather stable, as precious metals tend to preserve their value over time. Commerce was predominantly wholesale for lack of coins of lower denomination.
|1575||Corn (1 fanega)*||18 reales|
|1575||Sugar (1 arroba)*||43 reales|
|1575||Fabric (1 vara)*||12 reales|
|1600||Young unblemished male slave||480 pesos|
|1600||Young unblemished female slave||560 pesos|
|1672||Corn (1 fanega)||26 reales|
|1672||Wheat (1 fanega)||30 reales|
|1672||Sugar (1 fanega)||39 reales|
|1672||Soap (1 quintal)*||160 reales|
|1672||Paper (resma)*||52 reales|
Coinage of Macuquinas
The Lima Mint’s most important section was the furnace, where around 20 people worked under the orders of a foreman. Silver bars were melted, laced with an alloy, and turned into rails. These were cut and carved into blanks of the right size and weight using tallonas (long scissors). The blanks where then struck between two dies and their edges trimmed. Slave work was commonly used at the Lima Mint’s furnace. Some of the instruments used in the coining process are displayed here.
In 1751 the Lima Mint launched the production of “cordon-rimmed” coins. The use of innovative coining machines gave them an almost perfectly round contour. They were named after the design resembling a delicate cordon that decorated the rim. The cordon rim was instrumental in preventing cutting and chipping, as was usual with macuquinas. The purchasing power of gold coins was 16 times that of silver coins. They were not intended for everyday transactions, but for government bookkeeping and large-scale overseas commerce. The eight-escudo gold coin —the highest denomination of that time— was known as doblón.
From the 18th century, a profile bust of the reigning monarch was engraved in coins to promote his renown across the Empire. As kings were represented wearing the large wig that was fashionable at the time, these coins were popularly known as peluconas (after “peluca”, the Spanish word for “wig”). A coin showing the effigy of King Ferdinand VI is displayed here.
Medals (known as Fidelity Pledges) were thrown to the crowds during accession celebrations or distributed in the colonies.
Increase in Coinage During the Colonial Era
Coinage expanded gradually during the colonial era in response to population and economic growth. Until the mid-18th century, minting of silver coins in Lima (they were also made in Potosí, which remained under the Viceroyalty of Peru until 1776) varied between one and two million pesos a year. Since then production increased rapidly to over five million in the 1790s. Not all of it remained in Peru: a large portion left the territory as payment for imports and government or individual remittances.
Fractional coins, intended for everyday transactions, were also minted around that time. Half- and ¼-real coins are shown here. However, shortages of fractional money became a constant problem until the mid-20th century, which led to the practice of splitting coins.
Late Colonial Coins
The use of money is one of the most important legacies of colonial times. It created a payment instrument accessible to all, promoted labor specialization, and facilitated commerce and saving. In Indian villages it became common practice to keep community money in two- or three-locked chests.
An example of the coin known as “Lima bust”, made during the first years of the reign of Ferdinand VII, is shown here. As this monarch was in exile during Napoleon’s invasion of Spain, and therefore his true resemblance was unknown in the colonies, a stereotyped image was used instead.
The War of Independence
The War of Independence (1820-1824) brought a profound monetary disruption. The silver mines of Pasco, the most important of the time, passed several times from royalist to patriot hands and vice versa. When Viceroy La Serna’s army left Lima for Cusco in 1821, the mint’s heavy machinery remained in Lima under patriot control. During a later raid on Lima, the royalist army seized part of the machinery and carried it to Cusco, where the Viceroy had set up the seat of government, seriously affecting currency production.
General San Martín ordered the minting of the coins known as Perú Libre (Free Peru) to replace gradually those bearing the bust of the Spanish monarch Ferdinand VII. As silver grew scarce, an attempt was made to introduce paper money and copper coins, but the public rejected them. The bills had a rough finish and were easy to counterfeit, as can be seen in the samples shown here. In response to public rejection, in 1822 San Martín’s government contracted Peru’s first debt agreement with London creditors. These funds were used to continue the war against Spain.
FROM INDEPENDENCE TO THE “SALTPETER WAR”
The Cult of Heroes and the Peru-Bolivian Confederation
After San Martín’s withdrawal from Peru, Simón Bolívar brought the independence war to an end with the battles of Junín and Ayacucho (1824). This room shows a sample of coins inspired by the cult of heroes, among them José de San Martín, Simón Bolívar, Agustín Gamarra, Luis José de Orbegoso, Ramón Castilla, and José Gabriel Condorcanqui (Túpac Amaru II).
Present-day Latin American countries were created from colonial-era Audiences, Captainships, and Viceroyalties. However, as such jurisdictions had fuzzy borders or could make little sense as sovereign countries, after the Independence tensions among the new nations resulted in several divisions and mergers. In the Andean region, some Peruvian and Bolivian leaders argued that the separation of two territories that had been united under the Viceroyalty of Peru considerably weakened their economic potential and severed their age-old cultural unity. Between 1836 and 1839 the Peru-Bolivian Confederation reunited what Bolívar and Sucre had separated. The confederation joined three national states under a single rule, but preserving their autonomy regarding several domains of domestic governance. For example, they could issue their own money, as can be seen from the samples around this room. A highlight of Confederation coins is the Radiant Sun, a symbol also used in the Argentinean escudo. Once the figure of the Spanish monarch was discarded, the new rulers, seeking for new symbols, chose the sun, which evoked both the ancestral god of the ancient Incas and the new republican ideals.
The Republican Peso
The scarcity of silver money during the first decades of the Republican Period created serious economic problems. During the War of Independence, many merchants and businessmen migrated from the country, taking their wealth with them. Those who stayed hoarded their money, thus withdrawing them from circulation. Production problems in the mines, caused by lack of capital and labor, aggravated the situation. In this context, the economy of south Peru was flooded with Bolivian “feeble” currency, thus called for its lower silver content than traditional Spanish coins. Although it created confusion and price instability, it nonetheless provided the country with much-needed currency. Money shortages led to the creation of mints in Cusco (1826-1845), Cerro de Pasco (1836-1857), and Arequipa (1836-1841), which produced coins of which a few samples are showcased here.
Peru’s last eight-real coins were minted in Pasco in 1857. In that year the government of Ramón Castilla changed the monetary system from octal to decimal, such that a peso was made up of ten reales instead of eight. It also ordered the modernization of the machinery and facilities of the Lima Mint, then under the direction of Polish engineer Ernesto Malinowski. Steam machines were shipped in from England to replace the old Spanish ones. The monetary unit continued to be the peso, although there were also gold escudos in circulation. Due to their high purchasing power, the latter played the same role as present-day high-denomination banknotes.
The Sol Replaces the Peso
On 14 February 1863, the government of Marshal Miguel de San Román enacted the replacement of the peso left by the Spanish for the sol. The new currency was also coined in nine-tenths fine silver, with a weight of 25 grams and a diameter of 37 millimeters. Equivalence was one peso for 0.8 soles; i.e., the sol needed to have a higher value than the currency in circulation, dominated by the “Bolivian feeble”. The sol started to depreciate shortly afterwards due to the depreciation of silver in world markets. Massive production of silver in countries like Mexico, Russia, and the U.S. contributed to depreciating silver vis-à-vis gold.
The representation of the “Standing Motherland” was replaced by a more Europeanized version, featuring a sitting woman dressed as a Vestal Virgin and holding the Phrygian cap, a symbol of the French Revolution. Five-cent to one sol coins were minted in silver, reserving gold for higher denominations (5, 10, and 20 soles). One- and two-cent copper coins were also issued. Ten-cent coins were known as reales until the second half of the 20th century.
Silver Fineness of the Peruvian Currency
Until the beginning of the 20th century, money was backed by its own physical support. While this was instrumental in keeping its value stable, it also had some shortcomings. If the value of the metal in a coin diminished, so did its purchasing power. The opposite situation led to currency hoarding and outflows, as merchants preferred to sell it abroad as precious metal.
Since the creation of central banks, the purchasing power of money has depended on the ratio between the quantity of money and the goods and services in the economy. This trend was introduced gradually in Peru during the 20th century. The silver fineness of coins was reduced down to just five tenths (half silver and half alloy).
The Sol de Oro
Although gold coins have existed in different times and places, they have never been very practical for everyday transactions due to their high value. The panel shows the prices of some basic goods in 19th-century Lima. Staples sold for a few reales or cents. Workers’ salaries were paid daily. The latter varied widely among regions, but in the 1860s it stood at one sol in Lima and Callao and 10-20 cents in the Sierra provinces. Between 1875 and 1888 there was a strong depreciation that affected especially sol bills, but the value of silver soles was defended by their metal value.
|1889||Salary (monthly): Congress doorman||60.00|
|1889||Salary (monthly): Mint doorman||25.00|
|1889||Salary (monthly): Army Captain||80.00|
Paper Money: Banknotes
After San Martín’s failed attempt to introduce paper or fiduciary money (based on public faith), it reappeared in 1862. Partly due to money shortages and for practical reasons, businessmen made their payments with checks issued by banks operating in Lima since the Guano Bonanza. The practice soon extended to the rest of the population. Banknotes became popular, as merchants trusted they could be exchanged for metal coins at the issuing banks.
At that time there was no special law regulating banks, and the latter abided by the general commercial code. This room shows banknotes issued by the National Bank of Peru and the Bank of Peru, founded by businessmen linked to the guano (seabird fertilizer) and saltpeter industries. Denominations are from 20 cents to 500 soles. Private banks did not survive beyond the War of the Pacific between Bolivia, Chile, and Peru (1979-1883).
Banks, Regional Coins, and Fiscal Bills in the 19th Century
A highlight of economic activity during the 19th century was the production of guano, saltpeter, sugar, cotton, and wool for export. Bills issued by the Piura, Chicama Valley, Trujillo, Arequipa, and Tacna banks, founded in the 1870s, are shown here. Banknotes contributed to resolving the considerable currency shortages that were pervasive outside Lima. All these banks disappeared during the critical years of the War of the Pacific, leaving many holders with worthless banknotes.
This room shows bills issued by the Public Works Company of Peru, created by U.S. businessman Henry Meiggs for the construction of railways, and bills issued by the government during the War of the Pacific. In the 1870s, in response to the collapse of guano exports and the need to honor the foreign debt, the government guaranteed the value of banknotes in exchange for money to meet its obligations. This arrangement originated the Fiscal Bill, issued by private banks but backed by the government.
The ability to issue money in this way brought about the practice of putting an excessive amount of money into circulation vis-à-vis the goods and services in the economy. The consequence was inflation for payments made in paper money (goods and services had two prices, according to whether metal coins or paper money were used to pay for them). In 1888 the government ceased to recognize fiscal bills and accepted only silver soles thereafter. This decision was the foundation for a deep and protracted public distrust of paper money.
Money During the War of the Pacific: The Inca
In response to the depreciation and discredit of fiscal bills, the emergency government of Nicolás de Piérola (1879-1881) created a new currency, the inca, to be issued in both gold and silver. Gold coins were never issued due to the difficult conditions of the war; and silver coins were issued in denominations of one and five pesetas (20 cents and one inca, respectively). Bills convertible into gold were also put into circulation, meaning that theoretically the public could exchange the bills for gold at government agencies. However, convertibility was suspended due to acute economic distress.
Recalling the negative experience with fiscal bills and given that incas could be easily counterfeited, the population rejected the new bills and most of them remained undistributed. During the occupation of Lima by the Chilean army (1881-1883), some rolls of money were stolen by the occupation troops. Later, the government rejected the payment of taxes and other charges with incas or fiscal bills, which aggravated their discredit. The inca was short-lived (1880 to 1882). The sol continued to be issued between 1879 and 1897.
FROM THE END OF THE 19th CENTURY TO THE 1929 GLOBAL CRISIS
Creation of the Peruvian Pound (Libra Peruana)
The depreciation of silver from 1870 accelerated as the world’s largest economies, especially Great Britain, adopted the gold standard and abandoned silver as store of value. Other countries started to liquidate their silver reserves, contributing further to its depreciation. Peru and other silver producers like Mexico and the U.S. resisted adoption of the new standard for some years, but eventually abandoned bimetallism.
In December 1897 a new currency was created in Peru, the Peruvian pound (libra peruana), after the prestigious British pound. In view that bills were still regarded in low esteem, it was agreed that the Peruvian pound would circulate only in gold coins. It was established that the Peruvian pound would be a 22 millimeter, 7.988 gram, fine gold disk showing a representation of Inca Emperor Manco Cápac.
The Peruvian Pound Between 1897 and 1930
The value of the Peruvian pound was fixed at 10 soles (which is why such amount was commonly known as libra for many years after the Peruvian pound ceased to circulate). Silver soles (worth 100 cents) continued to be issued. From 1922 Peruvian pound bills made their appearance in denominations of ½, 1, 5, and 10 pounds.
Together with the creation of the Peruvian pound (Lp) in 1897, it was established that the National Mint would cease to produce gold and silver coins commissioned by the private sector. From then on the government would decide the amount and timing of coin issuances, and would provide the necessary gold and silver for this purpose. By reserving to the government an instrument previously in the hands of miners and merchants, this measure marked the beginning of modern monetary policy in Peru. Before this innovation, money shortages had been common and attempts had been made to resolve them by issuing bank and fiscal bills, with adverse results. The 1929 world crisis sparked a surge in the price of gold, seen internationally as the best refuge asset. This disrupted the monetary order and led to a massive abandonment of the gold standard. In Peru, the last Lp issuances were made in 1930.
The Circular Check
The outbreak of WWI (1914) led to massive hiding and hoarding of gold in the advanced nations. In Peru, as in other parts of the world, savers and businesses moved to withdraw their deposits, creating the risk of a collapse of the banking system. In response, the government authorized banks to issue circular checks and established a Surveillance Board in charge of ensuring that issuances were backed by real assets (property), claims (debt outstanding) or gold deposits in the country or abroad. It was established that checks could be exchanged for gold coins six months after the end of the war.
Circular checks were issued in denominations of 1, 5, and 10 pounds (and even for fractions of a pound). Their creation was followed by a hot debate fueled by the bad memories of the bills issued in the 1870s. For this reason they were named circular checks instead of bills. The Surveillance Board, which laid the foundation for the Reserve Bank in the next decade, was made up of officials from the Government, Congress, banks, and the Lima Chamber of Commerce.
On 5 August 1921 a separatist revolt ignited in the department of Loreto, led by Captain Guillermo Cervantes Vásquez and a group of veterans from the river combat of La Pedrera (1911). The region was mired in a deep recession caused by the end of the Rubber Boom, aggravated by a long delay in the payment of soldiers’ and civil servants’ salaries. The local population was also discontented with the conduct of the ongoing border negotiations with Colombia.
The rebellion was put down in the same year, when troops sent from Lima regained control of the region. Cervantes fled to Ecuador. It was the only uprising in Peruvian history to issue its own currency, a series of bills that came to be known as cervanteros, after the name of the rebel leader. The bills were received with reluctance by local businesses and soon depreciated to one-tenth of their face value. They were made by a printing company in the city of Iquitos. Experts agree that, taking into consideration the difficult conditions in which the bills were made, the printers did a reasonably good job.
THE PERUVIAN CURRENCY FROM THE FOUNDATION OF THE CENTRAL BANK
Central Banking in Peru; the Sol de Oro
The world’s first central bank, the Bank of England, appeared in Europe at the end of the 17th century. However, central banks became a major instrument of government only during the 19th century, when the growing complexity of economic development and the strengthening of national states demanded a specialized monetary policy. When money in circulation consisted exclusively of disks made of precious metal, issuances were limited by a country’s ability to produce or purchase gold or silver. In contrast, the widespread use of paper or fiduciary money called for the establishment of central banks in charge of centralizing and controlling money issuances to prevent sudden and disorderly price fluctuations.
The Reserve Bank of Peru was founded in 1922 and issued its first bills in the same year. In 1931 the Reserve Bank became the Central Reserve Bank of Peru (BCRP), as it is known to this day. The organization of the BCRP was shaped after the recommendations made by the Kemmerer Mission (U.S.) to confront the economic problems caused by the Great Depression of 1929.
The first fractional sol de oro coin (1/2 sol de oro) began to circulate in 1935. The first coin with the denomination sol de oro was issued in 1943, in the form of a bronze disk of a diameter of 33 millimeters. One half sol and 10 and 5 cent coins were minted in bronze. The two- and one-cent coins (known as gordo and chico, respectively) were made of copper. In 1968, following a global trend, it was decided to keep reserves not in gold but in currencies of stable value and international acceptance. From 1965 the sol disk was reduced to 28 millimeters of diameter. From 1966 it carried the effigy of a vicuña on one side.
Cents and Tokens
A common problem with precious metal coins was their high denomination, which made them unfit for small transactions. This tended to keep a majority of the population isolated from the currency and created a double economy, in which the segment with access to the currency undertook commerce and large operations, while the other one received payment in kind for their work or goods. However, since the mid-19th century, the owners of country estates and mining camps created their own means or payment (tokens), valid only within their premises, to pay their workers. As the latter consumed virtually nothing outside the estates or camps, they did not require any other currency. Tokens were made of rubber or metal and were difficult to counterfeit.
The National Mint
The National Mint stands on the same land where it was built after the great earthquake of 1746. With Independence, the Lima Mint became the National Mint. The building also hosted the Court of Accounts, in charge of supervising government finances. The latter has been restored several times, preserving the original style of 18th-century master builders Marcos Luis Godines and Salvador de la Villa. In 1943 the National Mint came under the administration of the BCRP and in 1972 it was officially declared part of Peru’s National Heritage.
In its fourth centennial, the National Mint issued a series of gold, silver, and brass commemorative sol coins. The reverse shows a pattern reminiscent of the first coin ever minted in Peru, known as Columnaria de Rincón.
Carvers (talladores) and engravers (grabadores) are key mint members. They are in charge of designing and giving artistic value to coins and medals. Armando Pareja (Huancavelica 1901 – Lima 1984) and Raymond Pelletier (France 1907 – Lima 1958) were outstanding artists that designed most of the coins showcased in this room.
The First Sol de Oro Bills
The sol de oro remained in circulation for over half a century, more than both the Peruvian pound (33 years) and the peso of the early republic (42 years). This room shows the first sol de oro bills, with denominations from one to 500, which circulated between the 1930s and the 1960s. The first issuances preserved the effigies from the Peruvian pound (the shepherdess and the rubber worker) to facilitate public acceptance of the new currency. In the 1950s the latter images were changed for the Sitting Liberty, represented by a woman surrounded by the symbols of the French revolution.
Between the 1940s and the 1960s, the highest denomination was 500 soles, exceeding by far the minimum wage (60 soles in 1950-1956). Once the problems created by the Great Depression had been left behind, in the 1930s Peru enjoyed an export boom based on cotton, sugar, copper, and oil. After WWII, fisheries and in particular fishmeal became important export items.
Sol de Oro Bills During the Military Government
A new series of sol de oro bills was issued at the beginning of the 1968-1980 military regime, with denominations from 5 to 1,000 soles. The Sitting Liberty was dropped for the effigies of Peruvian heroes, including Indian and mestizo figures like Inca Emperor Pachacútec (5 soles), writer Garcilaso de la Vega (10 soles), and 18th-century revolutionary leader Túpac Amaru II (50 soles). Physician and geographer Hipólito Unanue, Presidents Ramón Castilla and Nicolás de Piérola, and War of the Pacific heroes Miguel Grau and Francisco Bolognesi featured in the 100, 200, 500 and 1,000 soles bills, respectively.
The 1960s brought an interruption of the export boom, which resulted in a strong devaluation of the sol in 1967-1968. At the time of the creation of the sol, the exchange rate was around four soles to the U.S. dollar, but it increase gradually over the years, reaching 43 soles to the U.S. dollar in 1968. The appearance of the 1,000 soles bill in 1968 reflected the currency’s loss of purchasing power. Additionally, coins disappeared from circulation, as their metal value grew above their nominal value. Anecdotally, during the coin shortage businesses used small merchandises, like matchboxes and sweets, to give change.
End of the Sol de Oro
Economic deterioration accelerated in the 1980s. Widespread subsidies and a swelling public payroll led to large fiscal deficits. It became common practice to cover the latter with money issuances that seriously eroded the sol’s purchasing power. The public sought refuge in the U.S. dollar, which became a sort of de facto currency. At the end of President Fernando Belaúnde’s second term (1985), annual inflation was above 100% (i.e., prices doubled each year). The currency depreciated dramatically against the U.S. dollar in 1980-1985 (from 300 to 13,000 soles to the U.S. dollar). The metal currency practically disappeared. This room shows the last sol coins. Small metal disks reached a face value of 500 soles: they could not be made larger, as the value of the metal in them would have been higher than the coins’ denomination. Finally, in 1985, the inti was created to replace the sol.
Inflation in the 1980s
Depreciation and inflation started to accelerate in 1983. Bills reached a nominal value of 50 thousand soles. In an inflationary process, not all prices rise at the same pace. Those who receive salaries or rents have difficulties in keeping up with other prices and experience a deterioration in their living standards. In contrast, other groups, like exporters, preserve their purchasing power, as they receive foreign exchange whose value increases constantly. Exchange rate controls and the prohibition to hold dollars were introduced in Peru in an attempt to alleviate the shortage of foreign currency.
As imports of the new inti bills were initially delayed, bank checks (a few examples of which are shown here) were provisionally put into circulation, like during WWI.
The inti, equivalent to 1,000 soles, was introduced in 1985, at the beginning of President Alan García’s first term, to facilitate transactions and accounting. The new currency aimed at providing a confidence shock to the population, as it was supposed to signal the end of devaluation and high inflation. The first series of intis consisted of nickel silver one- and five-inti coins bearing the effigy of national hero Miguel Grau, as well as 10- to 500-inti bills showing other heroes and presidents. The government’s economic program included price controls to eliminate inflation, as well as low-interest loans and fiscal expansion to promote growth. After two years, the government’s policies proved unsustainable: inflation soared above 1,000 percent a year, to hyperinflation levels.
Coins disappeared from circulation and bills reached a face value of 5 million intis, which was unprecedented in Peru’s history. The one million- and five million-inti bills showed the effigies of scientists Hipólito Unanue and Antonio Raimondi.
Substitution of the dollar for the national currency accelerated, as the government proved incapable of enforcing price controls. Purchases, rent agreements, labor contracts, and bank loans in dollars became normal practices. Three-fourths of the money supply was denominated in dollars. Dollar street hawkers (cambistas) became a common feature of the urban landscape.
The End of Hyperinflation and the Nuevo Sol
In 1990 inflation soared to 7,650% and the exchange rate reached a record 300 thousand intis to the dollar. One of the first measures of the newly elected government, led by President Alberto Fujimori, was to create an accounting unit called inti/millón, which slashed six zeroes from the domestic currency. In 1991 the inti/millón became the nuevo sol, equivalent to one billion old soles. The impact of hyperinflation is dramatically illustrated here: 10 thousand 100-inti bills are equivalent to one nuevo sol.
To avoid repeating the experience with the inti, a different program was adopted: as the population had ceased to trust the government’s ability to control prices, these were allowed to float freely. Crucially, the 1993 Constitution established that the BCRP was independent and ruled out monetization of the public debt. These instruments empowered the BCRP to reduce inflation. The resolution of sovereign arrears and the introduction of equal treatment to domestic and foreign firms attracted considerable investment flows, which contributed significantly to accelerating the economic recovery.
This room shows nickel silver one-sol and 50-cent coins and brass 20-, 10-, 5-, and one-cent coins. For the first time, the BCRP issued bimetallic 2- and 5-nuevo sol coins, with a brass center fitted into a steel ring.
Nuevo Sol Bills
The first nuevo sol bills appeared in 1991, with denominations of 10, 20, 50, and 100 nuevos soles. In 1995 the BCRP added the 200-nuevo sol denomination, the highest to this day. Nuevo sol bills bear the images of 20th-century Peruvian intellectuals. The 20-, 50-, and 100-nuevo sol bills show the effigies of historian Raúl Porras Barrenechea, writer Abraham Valdelomar, and historian Jorge Basadre Grohman, respectively. The practice of showing images of Presidents and military heroes was dropped, except in the case of air force pilot José Quiñones, a hero of the 1941 war against Ecuador, on the 10-nuevo sol bill. The 200-nuevo sol bill shows the image of Saint Rose of Lima, the first Roman Catholic Saint of the Americas.
From 1997 inflation has remained stable at one digit, which has favored financial resilience and higher private investment. This in turn has promoted high and sustained growth and declining poverty. In 2002 the BCRP adopted an inflation targeting scheme, with a target of 2.5% ± 1%. In view of Peru’s success in bringing down inflation, the target was reduced to 2% in 2007.