Lessons from Ecuador on what happens when your country runs out of money.
WHETHER FOR DAYS OR MONTHS, THE IDEA THAT BANK Computers will fail is perhaps the most widely held belief of what will come to pass on New Year's Eve. Recent history in Ecuador tells us that a few days without access to funds can have sweeping effects on individual lives and the economy at large.
Facing the collapse of the country's financial system, the government came to the fateful conclusion late Sunday, March 14th, that it simply could not allow the system to open the following day. The national "Banking Holiday" was made public at 6 a.m. Monday. Most Ecuadoreans missed the televised announcement, only to be confronted with the bewildering reality of locked bank doors and useless ATM cards.
By the time the hiatus ended, Ecuador's entire banking system had been closed for a full nine days; some funds remain frozen under strict regulations. As the following accounts illustrate, when people run out of money, they lose the ability to guide their lives.
SEGUNDO ENRIQUE MACAS, Tailor
Segundo Enrique Macas quantifies his economic woes in the number of suits that are never picked up from his small tailor shop on the south side of Quito. Right now his troubles add up to 18, and every last one he blames on the banking shut down, now more than three months past. "They were all ordered, but people just never picked them up:' he says, hovering over a new bolt of cloth. "I don't know if they'll ever come." Macas, 60, and his two assistants average a production of four suits a week, which means he has just over a full month's labor wasting away in the closet.
Like most of his neighbors in the bustling business district, he kept his Trajes Su Elegancia shop open during the bank closure with the hope that new customers would bring in the hard cash he needed. That simply didn't happen. "We were open but nobody ever came in," he says. "Even people who did have money were scared to spend it, because nobody knew when the banks were going to reopen. Everything came to a stop."
Like many Ecuadoreans, Macas found himself borrowing from family and friends to survive. He didn't even attempt to stock his shop with the US$50 dollars' worth of material he goes through on a weekly basis to keep the operation running.
Although the banking shutdown only lasted a short time, business has yet to rebound and the suits remain unclaimed. Despite his disappointment with long-time customers who left...