Musical Benjamins

Just as in the kid’s game “musical chairs,” where the object is to not be the kid left without a seat when the music stops, when you exchange money in Peru, if you are not careful, you could be the guy left holding the fake $100 bill. According to a May 7th Economist article, “In the past two months, Peru’s police have seized some $40m in near-perfect replicas of American dollar bills in $20, $50 and $100 denominations.” Dollars are in demand in Latin America not only because of the relative strength of the U.S. economy, but also because Ecuador, Panama and El Salvador use the dollar as their currency, thus enhancing their acceptance. The Economist further stated, “Lima is considered as the world’s new hot spot for counterfeit currency-making: while $43 million in counterfeit currency was seized solely in Peru since January 2009, $103 million was seized by the U.S. Secret Service in the rest of the world last year.” Not only are Peruvians on the watch for counterfeit bills, even if the bill is legitimate, they are very selective about what kind of shape the money is in.

Because of fees associated with ATM withdrawals, credit card transactions, traveler’s checks and bank wire transfers, we decided to bring lots of cash with us to Peru…lots of “Benjamins”. Every time we handed over a $100 bill at a Casa de Cambio (money exchange) they carefully scrutinized every inch of the note. They held it up to the light to check the watermark. They inspected it to see if there were rips, tears or excessive wear. Some of them carefully felt the surface to see if the texture was right. One guy actually sniffed a bill – presumably to detect counterfeit ink.

Thus far, we’ve had only two minor problems with our U.S. dollars. The first problem was when I was putting a deposit down on our apartment and I handed over three $100 bills to my landlord. Senor Miguel looked them over carefully and shook his head and handed one back to me, saying “Lo siento” (I’m sorry). It had a very small tear (less than one centimeter) near one of the corners. I gave him another unblemished bill and he was happy. That night I got out my scotch tape to very carefully repair the slight tear. The next day I went to a Casa de Cambio and I buried the taped bill in a stack of five $100 bills, but sure enough the money-changer found it and handed it back, shaking his head. Apparently even taped bills, no matter how slight, were not commonly accepted. I finally was able to change the bill at the largest bank in Cusco. When I mentioned this to a co-worker, she immediately asked me if I could change her told US notes for her at the same bank. Our second problem occurred when again changing dollars for Peruvian soles at a Casa de Cambio. My wife handed over a couple $100 bills and the woman behind the counter shook her head, handed back two of the bills and pointed to serial numbers that started with the letters “CB”. They explained to us that “CB” serial numbers were chosen for a run of counterfeit U.S. notes and that they couldn’t take them. We finally took them to the same bank to get them changed.

With everyone scrutinizing our money, we in turn become more selective when accepting theirs. One money changer tried to give me a torn Peruvian sol and I looked him in the eye and – channeling my landlord – shook my head and said “Lo siento” as I handed it back to him.