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Argentina: Where Cash Is King And Robberies Are On The Rise

A newsstand owner counts Argentine pesos in Buenos Aires. Many Argentines carry large amounts of cash, saying they do not trust banks. This has contributed to a surge in robberies.

Leonel Kaplan, an Argentine jazz musician, often has to travel abroad.

Before a recent trip to Europe, he went to a bank in Buenos Aires to change money and then went to get a haircut. Kaplan felt happy and relaxed and took the bus home after what had been an uneventful trip.

That, however, was about to change.

"As I get down from the bus, a motorcycle with two people wearing helmets cuts me off," he recalls. "One gets off and takes out a gun and says to me directly, 'Give me the 500 euros you got in the bank.' "

They knew exactly how much money he had changed. It was, he says, a pretty professional job.

Distrust Of Banks

In the region, Brazil, Venezuela and Honduras have the lock on murders — they are some of the most violent countries in the world. Argentina is still comparatively safe.

But according to an annual United Nations report on crime in Latin America, Argentina's robbery rate is 41 percent higher than even Mexico's, which comes in second.

To understand this unexpected and very specific surge in crime, you have to look at the country's recent economic history.

Robberies in Argentina started soaring after the 2001 default — when the country, in effect, declared bankruptcy. And that would seem to be logical: Financial crisis equals more poverty and more thefts.

But that's not the whole picture. A number of analysts provide another explanation, and it has to do with what Kaplan told me at the end of our interview.

He says he doesn't have a bank account.

"I would never put my money in a bank. Because I know it could disappear," he says. "A bank is no more secure than underneath my mattress."

People in Argentina don't trust the banks. That means they carry around cash — a lot of it — to pay for what they need, says Alan Ciblis, the chairman of the political economy department of the National University of General Sarmiento.

"You can keep it in a safety box that they have in the vaults — that's probably the safest place," he says. "People have it under the mattress."

Ciblis says most people keep their savings these days in cash in a variety of places because of recent experience.

After the 2001 default, banks were locked down and accounts raided, which wiped out the savings of ordinary Argentines. Many people lost a lifetime of accumulated funds.

The Inflation Factor

There's another reason Argentines don't want to put their money in banks — inflation.

"When inflation begins to creep up and you have some extra pesos and you put it in a certificate of deposit in a bank, but the interest rate is below the inflation rate, then you have negative rates and you're losing money," Ciblis explains.

Let's say inflation is at 40 percent a year in Argentina. The government doesn't provide reliable figures, but that's what most economists estimate is the current annual rate.

The bank, meanwhile, may be giving you only 20 percent interest. That means your money is losing its value.

As a result, most people would rather risk the possibility that a thief gets into the house and steals the money hidden in the drawer, than face the near certainty that they will lose money in the banking system these days.

"In my opinion, the lack of trust in the banking system which is part of the Argentine culture now is an influence," says Alberto Binder, who studies crime. "But there are other issues — drug crime is growing."

"Argentina is basically a tranquil country, but that conceit is being used as a kind of opium," he says. "I think if you are a calm country surrounded by troubled ones, that should put you on maximum alert."

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