Keeping cash under a mattress

Hordes are hoarding
Mattress money matters



By Joshua Kurlantzick


Keeping cash under a mattress is not generally a smart money strategy. But if that cash is something you'd rather the authorities didn't know about, there may be few ready alternatives. Now as 12 European nations move to adopt a single currency-the euro-at the start of next year, cash stashers face a dilemma. If they hold on to their lire, deutsche marks, or pesetas, the money will become worthless after conversion day. But if they show up at the local bank with, say, a wheelbarrow full of lire to exchange for euros, they are likely to draw unwanted attention from the taxman or even the police. In Spain, the equivalent of $53 billion in tainted currency (dubbed "dinero B," or "B money," by locals) is thought to be stowed away. The Bank of Spain has relaxed rules to make it easier to exchange large amounts of local currency for euros without attracting official attention, but dinero B hoarders remain suspicious. Instead, they are exchanging pesetas for dollars, which are easier to obtain through unofficial channels and will retain their value after the euro conversion. They're also buying homes-driving Spain's housing market through the roof-and splurging on cosmetic surgery and other beauty services, payable in cash.


Take Spain's problem and multiply it across a euro zone encompassing hundreds of millions of people, and you're talking big money. Stephen Lewis, chief economist at Monument Derivatives in London, estimates the black-market economy is worth as much as 20 percent of its legal counterpart in some European countries. In Italy, for example, 20 percent of GDP would amount to about $176 billion; in Germany, even a 10 percent black-market share would total $184 billion. "If most of these people dealing on the black market don't convert their holdings to euros, it will seriously depress the European currency, rattling global markets," says Lewis. He believes that conversion of illicit cash to dollars is one reason for the baffling weakness of the euro. Those lumps under the mattress may make markets mighty uncomfortable.


Được sửa chữa bởi - despi on 22/12/2001 07:22