Buenos Aires – Where Cash is Still King
baptism of fire in an Argentine cash culture
I seem to remember way back in the past someone important but with a need for glasses saying soon we will see the end of the cash society for we will soon enter the cashless society. Yep not a very good prediction for sure. Even in computer sophisticated societies like Britain cash seems to be holding its own. Ok I know that most of us have a credit or debit card but still the cash tills keep opening and closing. I doubt that we will ever be in a position where no one uses cash and no country more so than in Argentina.
For good reason Argentines have a big fear of banks stealing their money – which in fact they did do during the economic crises just as the new century rolled in as it happens . However, even before that disastrous event the Argentines liked keeping their cash in cash if you get my meaning. When I first came here in 2003 I didn’t know that was the way here. Although along with other tourists arriving here in that era you couldn’t help but notice the violently noisy demonstrations every day held outside such respected organizations ( term used loosely) as Barclays, Lloyds and City Bank as protesters tried to drive the workers inside crazy by banging on saucepans in the hope that the banks would pay back the money they stole (if you are interested in what happened you can read more on this in my Argentine Report available through Escape Artist). Of course there was fat chance that a load of people banging saucepans was going to have the effect of banks politely giving the money back they stole. What it did do is reinforce the complete distrust of banks here and if you are dealing in “luca” you will be most welcome. Mattresses and security boxes are the favorite locations to keep money here.
The use of cash is involved in almost every transaction in Argentina. Now in the UK if you want to buy a property you call your lawyer and he handles it all for you. You never see the cash. Nope, all that work is handled electronically and one day without even seeing so much as a bean of your money the lawyer calls you and says “ok it’s time to move in come and get the keys”. It’s easy, clean and safe. Here you call your escribana and he says ok I will do the legal works and see you in such and such a place and by the way don’t forget to bring your suitcase of cash. It’s funny to think back but that’s exactly what happened to me the first time I purchased a property here. When I went to see a property I liked here in 2004 I said to the agent ok I like it, I would like to make an offer on it. Great he said just hand over 1000$US in ready cash and I will put your offer forward. Now just hold on a minute I said – hand over 1000US just like that and then what you get a holiday in the Caribbean? Tolerantly he explained the reserva as it’s called is their way of knowing that you are serious about your offer. Only with a reserve can an offer be put forward. Once he had the ”large one” he would put the offer forward and if it was accepted we would move to the next stage – I dreaded asking him what that might be! He said that copies of the deeds would be made available to lawyers so they could be checked out. He did say that if at this stage I decided to back out he would keep my 1000US thank you very much and that would be that – he would take a vacation in the Caribbean. It certainly made me think of all those times that people had made offers on properties I had owned in the UK only for them to decide that months later the front gate wasn’t quite the right shape after all and backed out – leaving me with lawyer bills and three months of wasted time . Why oh why don’t we adopt this kind system in the UK – it would drive all those time wasters who never had any intention of buying away – if you like it, put your cash where your mouth is that’s how it should be. Sorry I digress but I can see some of you nodding frantically in agreement on this point.
To continue – my offer was accepted and we moved to the next stage. The agent said that the deeds would be available to be inspected and that it would take about two weeks to be done and we could finalize the deal – two weeks? don’t you mean two months? I blurted out having been accustomed to the tortoise like speed of lawyers in the UK. Nope two weeks he confirmed maybe quicker. Off I set to see my escribana (Spanish lawyer) a little light headed.
My escribana said no problem he would study the paper work and let me know when we could complete the deal. I said ok where do I transfer the money to on the day?. Well he said, with a smile on his face, you transfer it to a big brown paper bag and bring it along with you. I of course though he was joking but remember, this article is called Buenos Aires Where Cash is King and I was just about to find out that really was the case here.
I was expected to bring along with me something like 80000US$ in cash. It was at this stage that I started to think that hey those tortoise paced solitaires in the UK weren’t as bad as I thought. On leaving his office I was really having second thoughts about it all - after all I had never seen that much cash in the flesh in my life and started to wonder how bulky it would be . I was also in South America and didn’t it have a reputation of being a bit light fingered? How was I going to get this cash to the point of sale without being kidnapped on the way and my life’s savings relived from me? It was a dilemma I had to live with for a week or so. That was until my escribana mentioned that he had a very reliable security service that would deliver the cash to the place where we were completing the deal. Whew well that was a relief as I had nightmares about me carting a suitcase of wedge around the mean streets of Buenos Aires.
Come the day of the deal I spoke to my escribana and was assured that my money had arrived safely and that it was as snug as a bug in the back of a security truck and would be delivered at 12 precisely – this was sounding more like a movie than ever. When I turned up at the place we were finalizing the deal in the room that was packed with people. My escribana was there and I asked him who they all were. It seems that the place I was buying had a mortgage on it and the mortgagees were there to get their money back – in cash. The estate agent was there to get his commission –in cash, the owners were there to get their loot in – well you get the picture. Even the gas company was there to be paid a debt and lastly the managers of the building were there to be paid about six months of outstanding debt payment – hadn’t these people heard of bank transfers . It would seem that a simple cheque would just not do – nope cash was the reining monarch here without doubt.
As you can imagine I was very nervous as it was but little did I realize I would have to have all these people hanging around waiting to get a part of the action. As everyone sat down so the proceedings started. The escribana read out the entire legal document – he may well have been speaking Martian for as much as I understood- back then my Spanish was well not up to much – luckily my escribana spoke excellent English and translated it all for me. Then came the moment we had all been waiting for – the cash on delivery moment. Before signing we had to hand over the cash. The guy who was delivering the money came compete with gun holstered up – he put the money on the table and it was now my job to count it and then hand it all over. If you worked at Barclays bank or as plumber in the UK you will know what $100000US looks like in cash – if not you may have had the same look on your face as mine – a worried one. It’s quite a pile and it certainly brings home the value of money. How easy it is to spend half a million of a mortgage lender’s money when you never even see it. It’s not so easy to spend it when you see the actual cash sitting in the center of a table and it’s all yours.
For one brief second I thought about backing out and heading for the door – it seemed to so much money in the flesh. As I counted it I was aware of loads of eyes watching me and I checked that the man with the gun was watching the door – he was.
With money counted I proceeded to pay the agent and even though he had seen me count the money he began to count it again – umm this was going to take some time I remember thinking . And then the seller did the same as did everyone else – only my escribana said he wasn’t going to count it – at least he trusted me. Once the money was all counted and the security guard was gone we signed the deeds. Yippee I had survived and I was the proud owner of a Buenos Aires apartment – I must admit it felt good but without doubt I was a little shaky and I headed to the nearest bar to take a slug of whisky.
This was my baptism of fire in an Argentine cash culture where without doubt the paperless society is lagging behind a just a tad.
As I became used to dealing in cash, it started to seem normal and today it feels like there is no other better system – cash is king. After I had been through the process a few times I felt qualified to help some clients to help them purchase a property in Buenos Aires through my company Tierra Estates. Some took to it like a duck to water relying on my team’s expertise here and taking it all in their stride. Others were stuck down with panic attacks at the point of sale. For one client it was almost too much. When we arrived at the point of sale he just couldn’t get his head around the fact that there were so many people at the transaction. When it came time to count the money he literally had a panic attack and we had to postpone the proceedings until he felt better – he did brave it out a bit later and we completed the transaction – he probably went home and had a bottle of whisky . Another nearly fainted when we arrived at the bank and we found that the room we had reserved to do the deal wasn’t available and we were shown to a corridor to do a $120000US deal. Of course we protested and got our room but not before the buyer took a few slugs of vodka he had brought with him.
I myself when purchasing the beautiful Estancia La Margarita in the pampas had a few palpitations. It was the most money I had ever spent in my life on a property – well of course in the past in reality the bank purchased my properties and only owned a few of the bricks. The price I paid was in the hundreds of thousands and I had to pay it all in cash – now that was really a pile. In reality it went pretty smoothly but when I purchased it I really knew I had purchased it and not the bank – no fifty year mortgages here – you would be lucky to get a five year term. I spent a year renovating the estancia to make it a great place for guests to stay in and enjoy. In all that time payments to builders , purchasing of material, animals, kitchen sinks etc was cash cash cash and more cash.
What applies for apartments applies for everything here. Buy a new car – bring cash, buy a TV – bring cash and get a discount. It’s true if you want to get a deal here no doubt about it wave cash and you will get one. That goes for the corner shop to the big boys. Even the chain stores will offer you a discount if you pay with notes. Visa must be losing money here for sure.
The cash system works here and banks are simply not trusted. I reckon on any given day there must be millions of dollars being carried around in socks, bras, shoes, suitcases, you name it’s got money in it. Does it ever go wrong? Of course it does but it’s a sophisticated system and it’s about as likely as your British lawyer running off with your money – it happens but not often – and you can insure the money and buy valium – whew that’s a relief
About the author: David Cummings is the author of Argentine Report available through Escape Artist and the owner of La Estancia La Margarita a beautiful retreat in the Argentina Pampas. He is also the founder of Tierra Estates, a company which helps with the process of finding and purchasing property in Buenos Aires.
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how did you get to withdraw all that cash? How did that work? Can you mention specifics? I find it hard to believe no bank was involved, unless you western union-ed all the money.
Hola – I have lived in Rosario Argentina since 2004. I can generally support what this article says.
In 2004 I bought a new apartment in Rosario. My money was in the US. The transaction went as follows. My bank transferred the money to the National Bank Of Argentina (Banco Nacional) in New York City. They in turn transferred it to my builders account in their local bank. This all went well without a hitch. I too had to put down a 1000 dollars to reserve the transaction but this is a normal evryday occurence in real estate in the US. I am dumbfounded it isn’t in the UK. When I sold my apartment the transaction was in cash, counted in a bank, and all disbursements paid out in full. When I bought my car here I did it through an electronic funds transfer between my Rosario bank and the car dealers bank.
I am not sure exactly when this was written but while cash is king in Argentina I pay almost all my obligations via the internet from my Argentina bank account.
It should be noted that for foreigners it is tougher than all get out to open a bank account. Permanent residency visa is required.
The author is “right on”! I have lived in South America for almost seven years and played the same game when I bought and sold my house. It was a kick in the pants! I took 178,000 cash to a cambio and we all met in a secure room below the street. The money was counted, passed around and recounted. When I sold the palce, I received around 250,000 all in cash. Put it in a briefcase and left the building. Never a problem. It was nice not having to deal with the bankers and lending sharks that is so common in the US!