ECONOMY : Russians in Panic Over Plan for New $100 Bills

MOSCOW — Russia is bracing for another currency panic. This time, it’s not the ruble that’s in trouble but the $100 bill.

In a bid to thwart wily high-tech counterfeiters, the U.S. Treasury Department plans to unveil a new $100 bill with a larger portrait of Benjamin Franklin, a watermark and other features that are difficult to duplicate.

But the news that America plans to tamper with the greenback, an object of almost sacred devotion in Russia, has triggered near-hysteria here. While the Russian rich now have credit cards and dollar bank accounts to shield against ruble inflation, many of the poor still keep their savings in greenbacks stuffed under mattresses--and they are especially vulnerable to currency scams.

Russia has become the single largest destination for U.S. currency: An estimated $20 billion, mostly in $100 bills, was shipped to Russian banks last year.

A delegation of Treasury officials is expected to arrive in Moscow at the end of this month to meet with bankers and officials and to decide what measures should be taken to prepare for the new $100 bills, to be introduced next year.

“Many grandmas and grandpas, denying themselves everything, have saved up $300 or $500 for their funerals or for a dark day,” the Trud newspaper said. “That day is coming unexpectedly soon.”

Treasury officials have emphasized that existing $100 bills will not be recalled. Yet Russian commercial bankers warn that, no matter how much the United States would like to guarantee that the present bill will remain legal tender, Russian banks and exchange houses are likely to reject them--or accept them only at deeply discounted rates.

“Panic is inevitable,” said Yuri V. Sergeyev, deputy head of the currency department at Moscow Credit Bank. He predicted that banks and exchange houses will run out of the new bills quickly, or limit exchanges to a small sum per person, perhaps intentionally creating a bonanza for swindlers.

“The black market will be full of shady operators offering to exchange old notes for new ones at a very high commission--say $100 old for $70 or $80 new,” Sergeyev said. “Then this money will go to large banks that will in turn safely ship it to the [United] States to exchange it for new bills at a 1-to-1 ratio.”

Ordinary Russians have been victimized twice in recent years by confiscatory ruble “reforms.” In 1991 and 1994, the government introduced new ruble bills and declared that only tiny quantities of the old bills could be exchanged. Some people lost their life savings.

Already, many Russian banks and currency exchanges arbitrarily reject $100 bills that were printed before 1990 or that are dirty, crumpled or marred by handwriting. Many Russians who travel abroad carry out stacks of “dirty money,” which though worthless here is acceptable in the West.