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Sunday, March 6, 2005

MEDIA MIX

People are so funny about their paper money


Every so often there's a big news story about someone finding a huge amount of money in the unlikeliest of places. The most recent one had to do with tens of millions of yen in cash discovered in a stream in Hasuda, Saitama Prefecture.

Later, it was revealed that the money was actually stolen and abandoned. A woman and some accomplices broke into the residence of the woman's ex-boyfriend. She knew that he kept all his money at home, but after lifting the loot she got scared and threw it away.

Though other stories about found money usually don't involve larceny, they all point to a trend: people hoarding lots of cash. In many cases they're old people who just die and their relatives, unaware that there's money hidden in that old kimono or at the bottom of that chest of drawers, throw their possessions away. Later some lucky sanitation worker finds it.

This tansu yokin (literally, cash in the wardrobe) was once kept by recluses or limited to dirty money -- cash obtained illegally or kept secret to avoid taxes -- but since the advent of Japan's zero-interest policy back in the 1990s and the subsequent "payoff" system that says Japanese banks are only required to insure savings up to 10 million yen, more and more people don't see much point in keeping their money in financial institutions. The Japanese government estimates that between 32 and 47 percent of the currency now in circulation is, in fact, not circulating at all. It's sitting in people's houses, where they think it's safer.

Interestingly enough, banks don't really seem to care any more; or, at least, they don't care if it's in saving accounts. Having been burned big time with bad debts, they are no longer interested in the savings and loan business. If you bring them your money now, they'd rather you invest it. Beginning last year, banks were allowed to enter the brokerage business, and the recently announced merger between Sumitomo Mitsui Financial Group, representing Japan's third largest banking group, and Daiwa Securities, representing the second-largest brokerage group, has been trumpeted as the shape of things to come.

According to a recent feature in the Asahi Shimbun, securities companies have always been concentrated in large cities, but the banking industry's turn toward investment management will let people in outlying areas in on the fun. There is a determined strategy within the finance industry to get people to move their money from savings accounts in banks and post offices to stocks and bonds.

There's just one problem. The Japanese stock market has never been very strong. Banks, of course, have to overcome Japanese consumers' ingrained prejudice against anything that smacks of risk in terms of their savings, but they've had plenty of time to do it. Wasn't that what the "Big Bang" -- that grand liberalization of Japan's financial-service sector back in the '90s -- was all about? Few of the rules and regulations that protect investors in the West have been implemented in Japan, and banks still haven't figured out how to sell things like mutual funds.

But they do have their work cut out for them. When it comes to money, most people are still frightfully naive. It may be too much of a leap to say that the increase in burglaries is directly related to the widespread understanding that more people are keeping their cash at home or in their office, but at any rate the ease with which criminal groups have figured out how to steal ATM card data and secret codes says more about the average person's carelessness than it does about the banks' lack of concern.

The banking industry has received a lot of flack in the media for not insuring individual savings stolen from ATMs. TV and newspapers are filled with horrifying stories about people having their entire savings taken in a single afternoon by resourceful thieves, and banks just shrug their shoulders and say they're not responsible. There's never been any love lost between banks and customers, but basically ATM thefts will continue to be a problem as long as Japanese people trust only in cash.

This blinkered belief in legal tender is noticed by both sides of the law. A few months ago the government released new notes with the idea that people would go to banks to exchange their tansu yokin -- most seem to feel that crisp new bills are more reliable than crinkly old ones. The scheme was simply to get them to bring their money to the bank in the hope that they'd leave at least some of it there. On the other hand, counterfeiters target Japan because it's easy to circulate fake bills in a country that's allergic to credit cards and personal checks. (Of course, the new bills are ostensibly supposed to foil these counterfeiters, but that remains to be seen.)

And since banks charge handling fees for every sort of transaction, people often prefer carrying large sums of money in order to make those transactions in person. One would assume that they would be extra careful, but apparently that isn't always the case.

According to Kyodo News, a total of 2.4 billion yen in cash was brought to police stations in Tokyo by honest citizens who found the money on subways, in parks, and at other public places. Seventy percent of this cash, or 1.8 billion yen, was returned to its rightful owners, with 440 million yen going to finders as rewards and 240 million yen unclaimed going into the Tokyo metropolitan government's coffers.

However, the Tokyo police also received reports from people saying they lost specific sums of money. The total amount was a whopping 7.5 billion yen last year, which indicates there are more dishonest citizens than honest ones. Either that or a lot of cash is wandering around out there without a tansu or a bank account to call home.



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