Since then, the Central Bank’s autonomy from the country has been credited with the relative stability of Chile’s currency. The Escudo was short-lived, and in 1975, a new Chilean Peso was issued at a conversion of 1 Peso for 1,000 Escudos. To control inflation, the Chilean Peso became the legal currency as it replaced the Escudo in 1960 at an exchange rate of 1 Escudo for 1,000 Pesos. The Central Bank of Chile was established in 1925, which brought stability to the country’s economy, but inflation continued. However, banks were unable to achieve this, and Chile prevented them from issuing any more notes.Īfter that, Chile became the sole issuer of banknotes for the country. In an effort to reduce inflation, private banknotes were allowed to be converted to precious metals between 18. The state became the primary supplier of paper currency and, due to inflation and wars, maintained the stance that banknotes were not convertible until 1895. This forced Chile to pass an inconvertibility act and make private banknotes inconvertible to gold or silver. Private banking and the general banking law passed by Chile in 1860 led to an increase in the issuance of private banknotes.īy allowing private banks to issue currency without strict regulations, Chile hoped to promote economic growth, but it led to poor management and a run on banks in 1878. Despite this, Chilean paper money was used sparingly in the first half of the 19th century. Initially, the peso was only produced in coins, but the paper currency was issued soon after its launch because of the scarcity of gold and silver. Chile won its independence from Spain in 1826, establishing its own monetary unit, the first Chilean peso, in 1817. The history of Chile’s currency began with the country’s War of Independence in 1810.
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