Ibiza Cash Deficit

Published 19 June 2009 Stephen White.

Tags: Ibiza News

a form of monetary policy

Old John Maynard Keynes would be turning in his grave if he heard the latest story of economic theory on Ibiza. Spain's central bank, The Bank of Spain, has decided to reduce the supply of coins of the realm to Ibiza. Their 'note' to the banks on the island explains that there won't be so many €2, €1 and 50 cent coins, but doesn't explain why.

Normally, M0, the number of notes and coins in circulation is controlled by the central bank as a form of monetary policy, however it's believed that in this case it's a cost cutting exercise. The theory on the island is that the Bank of Spain is trying to reduce its transport costs given that a million Euros' worth of coins weighs much more than a million Euro bill!

Already we're worried that cigarette machines, parking metres and the 'Everything a Euro' shops will be affected. Lucky Spanish travelling by ferry will be able to bring plenty of coins with them, but poor Brits coming over on Ryanair will just have to bring wedges of notes to avoid going over their baggage weight allowance. Well, that's our 2 cents' worth.