Strange Bin Laden Squirreling in Spain

Spain's government said yesterday it had ordered an investigation into how the country was soaking up a quarter of one of the world's largest denomination bank notes, the €500 (£345) bill.

With tax officials and the Bank of Spain unable to explain where all the notes were going to, the country's ample black market and many money-launderers became the chief suspects.

The €500 notes are popularly known in Spain as "Bin Ladens" because like the al-Qaida leader, everybody knows they are around but hardly anyone has seen them.

The Bank of Spain said the notes were increasingly being drawn from high street banks and then disappearing. Last month 100m more notes were issued to high street banks than were handed in by them. That accounted for 26% of the total issued in all 12 eurozone countries, according to El País newspaper.

A booming building industry is thought to account for much of the high-denomination cash that has disappeared. Some 60% of real estate companies reportedly accept cash payments, while some are even said to demand them.

The deputy mayor of the southern town of Marbella, Isabel García, was found to have €378,000 in €500 notes in her safe when police arrested her in a corruption investigation earlier this month.

Spaniards have a tradition of squirreling savings away in cash hoards. "We had the same thing with 10,000 peseta notes," a central bank source said. "For some it is a way of laundering money. For others it is just a way of keeping their savings."