Spain considers how to bring the 500 Euro notes into the banks
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By h.b. - Oct 6, 2008 - 6:45 AM
The plan to offer a fiscal amnesty to those who used the notes to previously evade tax has split the Spanish cabinet.

The Government is reported to be studying a plan to offer tax breaks to those who reveal the black money they have previously obtained in real estate deals. It’s the Government’s belief that the strength of the black economy in Spain, as indicated by the number of 500 € notes in circulation, is the secret weapon which some think shows the strength of the economy.

El Mundo reports that the cabinet is split on the plan to try and get some of the 108 million 500 € notes currently in circulation into the banks. It’s a total amount of more than 54 billion € and its entry into the banks would certainly improve liquidity for Spanish banks and Savings Banks.

The Prime Minister is reported to back the idea, but Pedro Solbes and the Bank of Spain are said to be against as it would in effect be a fiscal amnesty for opaque and illegal real estate transactions previously carried out across the country.

Meanwhile a survey in Público newspaper this morning has revealed that the Spanish people are in favour of the state helping out banks in the face of a crisis, but not of helping out real estate companies.

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