What’s the difference between a bank and a black market money changer?

Sanne van Oosten

Well, for one thing, trading your money from one currency to the next is a much less strenuous exercise when one gets their money at a bank. Quite different from changing your money with a black market money changer, and we can know, we have experienced both. Still, without all the stress while changing the money, we don’t see all that much difference between the two. Both are cheaters, the only difference being that bankers get away with it, while black market money traders do not.

Let me tell the story. Traveling through Myanmar can be quite challenging. For one thing, due to the economic sanctions, no foreign banks do any business with Myanmar. Meaning, you have to take a stack of crisp US dollar bills into the country and trade it for the local currency, kyat, on the spot. Exchange rates vary tremendously, so you have to look around before deciding where to change the money. You can change money at proper banks and hotels, but the best rate is found on the street. And when we say street, we mean the street. Just go to the street and wait until some uncouth looking young man approaches you and whispers, pssssst, wanna change some money?. Usually travel instincts will tell you that it’s better to change your money at the hotel lobby, but in the case of Myanmar, you’ll never find a better exchange rate than on the street.

If venturing out into such an endeavor, you have got to know what you are doing. You need to know what the best prices are and how to go about the deal. These people are going to try and cheat you out of as much money as you’ll allow them to. So we haggled the price down to the lowest we could get it and agreed on a deal. We waited under a tree until they went (to their mafia-esque superior?) and got the money. We made sure that we had the money they gave us safely in our bags before we handed them over a single cent. When our newly changed money was safely tucked away in our bags, we handed them over our money. It was quite a stack of bills, so they took a while counting it. We were watching their every move.

Then, the youngest of the gang started to distract me. In broken English he started yelling that he wanted a commission of $1,-. That wasn’t part of the deal, so we explained how we didn’t want to do that. He kept on pushing and pushing until we said that we wanted the deal to be off. So we took back our stack of bills and wanted to give them the money we had stored away in our bag. But, when we felt the money they gave back to us we noticed it had magically shrunk in the meantime. While the boy was distracting us with his request for the $1,- commission, the guy counting the money had made about a third of the bills disappear up his sleeve, in his pocket or wherever. We were furious and gave these street rats a good yelling, gave him the $1,- commission and were happy they hadn’t cheated me from more.

Happy to be back in non-sanctioned lands with working banks and ATM’s we wanted to take out some money while in Cambodia. Having had much trouble finding an ATM that took our card, we finally found a bank. After going through all the options the screen on the ATM told us that a $5,- fee was going to be deducted from our account for the transaction. Having exhaled a quick sigh of frustration we clicked accept.

Every single time we have traded money at a bank or taken out money from an ATM, a bank had earned a considerable amount off of the transaction. Ok, they need to set up infrastructure to ensure that our cards are accepted and we can take out money from many remote corners of the globe. But isn’t $5,- a little bit excessive? Every time this happens we don’t yell at anyone, we don’t threaten to break off the deal, we don’t even really go away in a huff, and we definitely don’t call anyone a street rat. But why not? Why do we accept cheating if a bank does it, even though we don’t when a black market money changer does it?

Before venturing out on a money changing expedition, we made sure we were educated in the field. We checked out numerous sources to find out where the best deals were and we made sure we knew what we were doing. We were aware that they were going to cheat us, so we made sure we were well equipped to do that. On the other hand, when going to a bank or random ATM, we never do that. We approach these institutions without educating ourselves on the ways in which they could cheat us. This way we are more vulnerable than ever.

When trading money on the street, we knew what the prices were supposed to be and haggled the shit out of them until we came to the best possible price. We made sure the deal was clear to everyone before we agreed on the transaction. But what can you do when deducting money from an ATM machine? You don’t even know what is going to be deducted by the bank at hand before you are near the end of the transaction. Then you can still back out, but there is always more. The bank at hand will say they’ll deduct, say, $5,- for the transaction, “commission”? But you often still see this: “plus additional fees charged by your own bank.” What these fees are, no traveler really knows, until you check the balance on your bank account and can no longer reverse the transaction.

When finding out we were being cheated, we wanted to reverse the deal right away, but we found out they had made a large chunk of our money disappear… seemingly vanished into thin air. Sound familiar? If not, let me help you out. After September 2008 more and more banks have been collapsing or getting into serious financial trouble. Even though banks often believed the were “too big to fail”, some of these banks didn’t come back, meaning many people lost their savings and equity funds plummeted. Some banks were bailed out by their governments, meaning gazillions of tax payer money was being poured into these institutions. They made a large chunk of our money disappear.

Back to the question I posed before. Why do we accept cheating if a bank cheats us, even though we don’t accept this when a black market money changer does it? It all had to do with institutionalization and class. First off, how satisfying would it be to scream at an ATM? If we call a bank angrily after an excessively high amount is taken off our bank account, we’ll be caught in a web of bureaucracy. They have a safety net set up so nobody can get to them. Second, it has everything to do with class. Fancy bankers in their suits with cufflinks seem like they know what they are doing. They present banking as a complicated business justifying excessively high pay and bonuses. Everything is as flashy as possible, thereby blinding us with their complicated made-up knowledge. But actually, it’s all very simple. Just as simple as with the black market money changer. But their exterior is different. They look unkempt, filthy, poor and underprivileged. We even went so far as to condescendingly call them street rats. But aren’t bankers the real street rats, doing the exact same thing, only with fancy outfits, cars and penthouse apartments?

So what’s the difference between a bank and a black market money changer? Actually, there isn’t much difference. The only difference is that we didn’t accept being cheated when a black market money changer, yelled at them and even condescendingly called them street rats. On the other hand, we do accept being cheated by banks every day. They take undefined amounts off of our bank accounts with a simple ATM transaction, they ask for much more “commission” than a Burmese black market money changer would ever dream of doing, and most importantly of all, they made a large chunk of our money disappear. In the case of the banks, nobody was held accountable, nobody had to pay for the economic downward spiral that started after the banks started to fall, we never educated ourselves to stand up against these banks, and worst of all, since this all happened, there seems to be no widespread social criticism. We are letting ourselves be cheated and, therefore, this could all happen again.

9 responses to “What’s the difference between a bank and a black market money changer?”

  1. Sanne says :

    Also, I think you’ll find this quote interesting:

    “The nutrition industry has the responsibility to guarantee that their products are not toxic. Why doesn’t this same guarantee apply for the world of finance? Wouldn’t it be strange if the producer of sausages would not be able to guarantee that there aren’t any shards of glass in the sausage? Wouldn’t it be even stranger if this turned out to be the case, that the producer of sausages would not even be held responsible?”

    It’s from Ewald Engelen, a professor of finance from the Amsterdam Business School. Last december I wrote a blog about his classes.

    http://bloggerswithoutborders.com/2011/12/04/breaking-the-social-silence-of-finance-ewald-engelen/#more-170

  2. Sanne says :

    Very interesting link! It really does show how much the Myanmar situation is changing. Who knows, maybe we were one of the last ones to change money on the street, even though it was a stressful experience, I would not have wanted to miss it, it gave me much food for thought, as you can see in this way way way too long blog (I’m glad you read it).

    Also, I was very pleased to see the large Occupy movement start up with their great slogans such as “we are the 99%”. However, most of society looked down on them. They were seen as crazy hippies and whenever the Occupy protesters said something along the lines of the banks being greedy, people would just shrug their shoulders and say, oh well, that’s their jobs. Nevertheless, people blowing 2 billion dollars should never again feel like they are “too big to fail”, as is the saying, they should reevaluate their ways of working.

  3. MediaTantrik says :

    Oh yes, people do criticise banks. Occupy Wall Street is about that. A group of the 99% protested over Christmas in the Bank of America, I think. Wells and Fargo just made losses of more than US $2 billion on risky trading.

  4. MediaTantrik says :

    The biggest criticism of the black money dealers is that they do not pay taxes, operate in violation of banking regulations and money laundering. In this situation where the Myanmarese banks are the only ones around, well tourists are a captive market. Criminal. 😉

    Banks are also a means to launder money or raise funds. Here in Indonesia, if you’re a huge local corporation, you’d have your own bank.

    I do not like banks as they are today. They are exploitative of the poor, and perhaps a little more than licensed loansharks. I do think they provide a means of storing and transferring funds and like a banker once told me, a means “to help the rich” with their fund management services and investment products. The role of business is to ‘make profits’ and ethics is not particularly a concern except for image and regulatory reasons.

    As far as the Myanmarese banks are concerned, I do not think they bought into US derivative products. They’re bankrolling something else.

    I found this article which provides more information on how to change foreign currency in Myanmar.
    http://www.myanmar2day.com/myanmar-information/2009/01/myanmar-kyat-currency-exchange-rate/

    Do tell me what you think of it.

  5. MediaTantrik says :

    I remember, once a long time ago, when I fell prey to the street money thugs in Mumbai. While exchanging some cash at a decent “street rate”, one of their lot was dressed in police attire came by and distracted me. They made off with the foreign currency while I realised I was cheated with a stack of smaller denominations.

    There are others who are based in stalls and shops which are reliable, though, and a trusted local can show the way.

    On another note, the black economy in many developing countries, which provides a sizeable number of jobs to locals, need the foreign exchange, too. I would not be surprised at all that such exchanges are used for money laundering and to finance other forms of vice, such as drug and human trafficking.

    Let’s consider the banks. Banks have to consider interbank rates and they absorb the risk of currency fluxes. They provide ATMs which is a secure and convenient facility for tourists. Of course there’s a whole lot of people to trickle fees to, from the utility companies, ATM technicians, security services, including billionaire CEOs, and dealing with central banks, but that’s besides the point. That’s capitalism.

    My advice would be to do one’s homework and find out what all your bank and credit card charges are for cash withdrawals and credit.

    Failing that, consider turning the blind eye and factoring it into your exchange, in terms of amount, or attitude (create your own ‘real’ exchange rate based on your transaction).
    .
    Are there other ways to make on this exchange? Gold ingots? Mac laptops? 🙂

    • Sanne says :

      Still, my point is that it is strange that we do criticize black market money dealers and we hardly criticize banks, even though they are doing just about the same thing. I understand banks need to charge money to be able to provide ATM’s and such, but still the prices are quite high, especially in an ever globalizing economy this is actually disproportionate. But we don’t criticize banks about this enough, they are institutionalized and valued by society. Even though that same society is in a crisis now thanks to irresponsible behavior by these same institutions, the banks. All my homework is done!

  6. Abdul Malik Omar says :

    Amazing article! But really no foreign banks allowed in Myanmar? That is an opportunity there. Say keep up with writing your articles. Your website has a very good brand on it.

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