Desperate Serbwife

A cash economy

I never realized how much trust I put in my bank. It has everything!! My savings, my future, my financial freedom. If my bank (or my government) decided one day to take my money, there is nothing I could do and I would be totally broke. I don't keep more than a few hundred dollars on me at any one time (and it's usually closer to $10). We, as Americans, don't ever think about this, and most of us never contemplate that we could lose everything if there were a run on the banks or the government raided our accounts (unless you lived through the depression, and then you know all too well that this could happen).

Yet, in Serbia, Argentina, and many other places, this nightmare has happened in the last decade. Not only does this stop all commerce in its tracks but it makes it next to impossible to get it going again once the crisis is over because people have learned to hide their cash in their mattresses rather than put it back in a bank where it's vulnerable. Without money in the banks and loans being provided to small businesses, the economy has a hard time recovering. Serbian businesses are only now starting to accept credit - but usually only at the nicer establishments.

In Argentina, the government raided people's personal bank accounts and took anything they had in foreign currency. The citizens had no recourse and will never get that money back.

In Serbia, the inflation was so bad in the 1990's that by the time people were paid in local currency at the end of the month, the amount was only enough money for a liter of milk and one loaf of bread. Serbia even holds the world record for the largest banknote ever printed at 500,000,000,000 Dinars. At the time this banknote was released, it was only worth enough money to buy a few liters of milk. People used to bring suitcases to the market in order to have enough cash to buy a couple of red peppers. The black market flourished and only foreign cash was accepted.

Since the fall of Milosevic, things have started to improve and the Dinar is relatively stable. However, if you make a large purchase, like buying a car, you must still pay cash. Mike and I have discovered this the hard way by having to transfer our savings to a local bank here in order to take it out in cash to pay the car dealer. Don't get me started on how nervous this makes me, but we have been reassured over and over again that this is how it's done here. And hopefully, thumbs in your fists (the Serbian equivalent of fingers crossed), we will have a good car soon, paid for in cash - yikes!!

posted by Brooke @ 7:23 AM