BOSTON — IT'S not unusual to purchase a property in Argentina with a hefty stack of $100 bills from the United States.
Expensive horses have been bought in Saudi Arabia for a couple of "bricks" of $100 dollar bills, each brick containing $400,000, still shrink-wrapped as when they left the US Federal Reserve.
Duty-free shops in Manila and taxi cabs in Hanoi, Vietnam, gladly take dollars.
Around the world, American currency - cold, green cash - turns many wheels of commerce.
"The growth in the use of United States currency abroad in the past five or six years has been extraordinary," says Dorothy Bradbury, deputy assistant US Treasury secretary for federal finance.
Favored for its relatively stable value and the backing of the world's largest economy, US cash outside the nation's borders now totals more than $263 billion, up from about $100 billion in 1985, the Fed estimates.
How much cash is $263 billion?
If it were divided into $100 bills, there would be roughly one for every two people, excluding Americans.
In a world of many uncertain, unstable currencies, dollars in a sugar bowl or under the mattress often provide a measure of certainty and stability for those who can obtain them.
Seeking refuge against hyperinflation or a sudden currency devaluation are only the most prominent reasons for the dollar's resilience. People also use greenbacks as a currency for illegal drug deals, to avoid red tape of local regulations, and as an almost universal means of payment by tourists.
The trend is global, Ms. Bradbury says. Greenbacks are in demand in South America, Central America, Asia, the Middle East, Eastern Europe, Russia, and Africa.
Dialing for (pallets of) dollars
How does so much money get overseas in the first place?
Some is carried in pockets and purses, such as when Mexicans working in America return to visit their families.
Much flows through the international banking system, which generally makes greenbacks as available as rice, wheat, or computer chips. Crisp bills are shipped by the pallet-load to those who can afford to buy and use them.
"If a business or an individual overseas wants cash in exchange for a deposit account in his bank, or for another currency, we are usually glad to do it for an exchange fee, as long as it is legal," says an official of a large American commercial bank with extensive international operations.
The East Coast bank is one of several that supply US currency to overseas banks and businesses. The official asked not to be identified, in part because these banks became publicity-shy after media reports of counterfeit $100 bills traveling the globe.
In many nations, cash dollars are in decline, a result of governments stabilizing currencies or leaving a communist past behind.
Former East Bloc bastions Russia and Poland are examples. And for now, the buck is less than almighty in Brazil and Israel (see related articles, right).
In Poland, recent stabilization has greatly lessened use of the dollar. Toward the end of Communist rule there, hard-currency stores sold Western goods for dollars.
After communism collapsed in 1989, with Poland's free market still struggling, the dollar was in common use. Inflation was a problem, and the zloty, the local currency, was not convertible into hard currencies such as dollars. Now, with the zloty recently made convertible and inflation largely under control, the dollar's role is diminishing.
In Russia, the ruble has stabilized somewhat, and so use of the dollar has eased. And the central bank has kept the dollar-ruble exchange rate in a fairly narrow corridor, so the dollar is no longer useful as an inflation hedge. But Russians may still be holding up to $20 billion in American cash, the preferred way of keeping savings. Banks are not trusted, so dollars are harbored in tool cupboards, books, and under mattresses.
Firms owned wholly by Russians are forbidden to price goods in anything but rubles. So many companies simply mark prices in "conventional units," well-known code for the value in dollars.
The Philippines may have a very different political past, but here, too, the dollar as cold cash seems to have lost some of its allure. The reason: the complete lifting of foreign-exchange controls in early 1993 and the related weakening of the dollar against the Philippine peso.
Dollars are no longer saved in cash in the Philippines as a hedge against inflation because the peso has been so strong. Bolstering demand for the peso are remittances from Filipino contract workers overseas.
While no longer hoarding dollars in bank vaults, Filipinos still keep dollars for travel or for purchases in duty-free shops in Manila. Duty-free goods are now available for pesos in free port zones such as Subic and Clark, both of which hosted US bases until recently.
Until this summer, global demand for dollars had been growing at about 8 to 10 percent a year, but in June and July the growth stopped. The growth resumed in August, but at an annual rate of about 6 percent, according to Federal Reserve figures.
It is not clear why the growth flattened in the summer, says a Fed spokesman, nor does the Fed have statistics that prove the flattening was due to overseas factors, although this is suspected. The currency supply in the US changes at a much steadier pace, determined by the Fed's view of the economy.
It is clear, though, that dollars flow overseas only as they are demanded. So the currency stabilization in various parts of the world cuts the demand in those areas.
Other factors can reduce demand for dollars. One example is widespread worry in Russia that older US $100 bills will become obsolete early in 1996 when the Treasury offers a new $100 bill.
Another factor could be the growing importance of the Japanese yen or German mark in some areas.
In Bosnia, the German currency is commonly used alongside the Bosnian dinar, while greenbacks puzzle shopkeepers.
In Asia, Japan's growing investment has boosted the yen's role in business circles. But on the street, the paper money of choice is still the dollar; yen are often accepted at a discount to their real value.
In China, people love cash, but not necessarily dollars. Citizens have a long tradition of stashing money under mattresses, a habit bred by low interest rates during more than four decades of communist rule. Economists there say citizens hold $25 billion at home. Some is in foreign currencies, but little in dollars.
The Chinese renminbi has appreciated during the last two years, and many people now prefer to hold their savings in this national currency.
Chinese fortunate enough to have passports and who travel use dollars, mainly to buy items at duty-free stores. Friends and family often ask these travelers to buy big-ticket items for them, such as foreign-made television sets and videocassette recorders.
Passing up pesos
But if the dollar's role has diminished in some country's, it remains strong in others.
In Mexico, the peso's 55-percent decline in value against the dollar this year has boosted demand for dollars. Advertisements for expensive goods such as computers or rental houses in upper-crust neighborhoods are now seen more often in dollars. No pesos, thank you.
Recently a group of Mexican business owners - envious perhaps of humble Mexican migrants who earn dollars in the US - proposed they be allowed to open dollar-based bank accounts within Mexico. The unfolding saga of Raul Salinas de Gortari (brother of a former Mexican president), with his $100-million-plus in Swiss and other accounts, reminds Mexicans that dollar accounts outside the country are nothing new to some in their society.
Africa was never colonized by the US, but the dollar is the foremost currency across much of that continent - even in former French colonies. It is readily accepted in restaurants, in many hotels, and by almost anyone on the street.
In Sierra Leone and Mozambique, countries worn down by vicious civil wars, the dollar is even more widely used. War-torn Angola has tried to crack down on traders who exchange money on the streets, but people still do it, partly to get better rates than in official exchange houses..
Only those clued in know where the traders lurk, and trades are adventures often done in cars several blocks from where the trader was met.
In Burma, one can get 120 kyats, the local currency, for $1 on the black market. But the government maintains an official rate of just under six kyats to the dollar.
To appease foreigners and to absorb as much of the black market as possible, the government offers Foreign Exchange Certificates, worth $1, which can be exchanged for 100 kyats each.
With the popularity of the dollar has come competition from counterfeiters.
As the US Treasury prepares to fight back by issuing harder-to-copy $100 bills in 1996, many people in other nations worry that the new bills will make their dollars worthless. Some businesses in Russia have stopped accepting $100 bills.
The US government is waging an information campaign in many parts of the world, including Russia, to inform people that all existing legitimate US currency will continue to be good, says Ms. Bradbury of the Treasury. Ad agencies are being hired in many countries to spread this message.
The US never has a recall when it issues a new note, but relies on commercial banks to trade in worn-out bills for new ones. By contrast, when some governments issue new notes, the old ones are sometimes not accepted in exchange, as has happened in Russia. Holders simply lost their money.
Part of the problem in Russia, though, has been the presence of counterfeit $100 bills, some of which are quite similar to authentic bills. According to Bradbury, some discounting is going on in Russia in unofficial (nonbanking) circles now when people exchange dollars for rubles. An international banker with Bank of America, based in San Francisco, says some Russians may be doing this discounting out of concern about counterfeit bills, which they will not be able to exchange in banks for the new $100 bills.
Africa also has its share of counterfeit $100 bills, and many hotels now won't accept any $100 bills.
Two investigative news reports in the US this year - one in Reader's Digest, the other in The New Yorker - spotlighted an alleged counterfeit operation abroad printing $100 bills that are supposedly very hard to detect as false. Reportedly these bills have reached Russia and other countries in large numbers. The two articles do not agree on either the geographic location of the alleged operation or on the number of bills supposedly put in circulation.
Reader's Digest, whose article appeared last March, cites Iran as the source of the slick counterfeit $100 bills, while The New Yorker, whose article appeared seven months later and did not mention the Reader's Digest piece, cites Lebanon and Syria as possible counterfeiting sites.
Seizures of counterfeit US currency abroad by the US Secret Service jumped to $120 million in 1993 from $30 million in 1992. In July of 1993, a House Republican task force released a report on how Iran was financing a "holy war" against the US. Among other things, the report tracked a consignment of counterfeit dollars from Iran, going through Syria to Islamic radicals in Lebanon. Following this report, the Secret Service assigned more agents overseas in an effort to seize a higher percentage of bogus dollars before they could be distributed by militants.
The Secret Service would not comment on areas where it has beefed up its bogus-bucks policing efforts, but local news reports out of the Middle East indicate this is certainly one area.
Bradbury says that credit card and check fraud far outstrips all counterfeiting efforts.
Treasury officials have made a number of trips this year to interview central and commercial banks and to look at currency exchange operations all over the world. They say that detection of counterfeits is handled ably in almost all cases. These officials also say the new $100 bill will keep US currency-printing technology well ahead of increasingly sophisticated methods available to counterfeiters.
Many nations have seen use of cash dollars by citizens decline as they control inflation or leave a communist past behind. Former East bloc bastions Russia and Poland are examples.