(Fortune) -- In the middle of the 2001 debt crisis, Argentines stormed their nation's banks to get their money out. To stop the stampede, the government imposed controls that allowed them to take out only $250 at a time and limited withdrawals for overseas trips to $1,000.
Greece, in the middle of its own financial crisis, is teetering on the brink of a default. Many of its wealthier citizens are also uneasy about what lies ahead for their cash. According to estimates from private bankers in Greece and Cyprus, as much as 10 billion euros have left the country for Greek-owned bank subsidiaries in Switzerland and Cyprus in the last couple of months.
"Customers are coming...from Greece on a daily basis," says one private banker who works for a Greek bank in Cyprus. "They fly here in the morning, bring us a check and fly back to Athens in the afternoon."
One banker in Athens reports that many of his clients have sent funds out of the country in recent weeks, fearing that the government will take a bigger bite of their money. "They're afraid they'll have to pay tax on their cash," he says.
Countries in economic turmoil historically look for unpopular ways to raise revenue, according to economists. So when things start to go sour, "everyone becomes convinced that the stage is being set for higher taxes," says former IMF economist Dev Kar, the lead economist for Global Financial Integrity, an international policy research center. "People with wealth then ship their money out, so government does not come and get it when it all comes crashing down."
But growing concerns that Greece's financial crisis will spill over to its banking system appear to be driving most of the outflow. The fear isn't totally unfounded: Late last month, Fitch Ratings downgraded the country's four major private-sector banks to two notches above junk status on fears that demand for loans may plunge, denting their potential profitability .
"I'm scared," says one 40-year-old Athenian woman, who's considering taking her nest egg to Cyprus. "I want to take my money out of the country before the banks run out of cash."
Not as bad as it seems
A run on the bank, a la Argentina, is not imminent, say banking and government officials. They acknowledge that money is leaving the country, but say that reports of massive capital outflows are "grossly overstated."
"There is a trickle, but nothing like a real flight that would put the system under pressure," says Anthimos Thomopoulos, chief financial officer of the National Bank of Greece, which holds a third of Greece's 250 billion euro total deposit pool.
The situation isn't overly worrisome right now, bank and government officials say, because most of the money has flowed to those Greek-owned banks abroad and should, in theory, be easier to repatriate. What's happening, says Nikolaos Karamouzis, deputy CEO of Eurobank EFG, a private bank in Greece with 84 billion euro in assets, is "not materially significant, despite the fact that there is widespread concern among our clients."
Exactly how much cash has left the country since the crisis exploded in mid-December is hard to determine, however. According to the most recent quarterly statistics available, the national deposit pool at the end of December dropped by less than a half a percent. But analysts point out those numbers do not reflect the full impact of the crisis, which picked up momentum in January and February after the government announced its belt-tightening measures.
A pesos to drachmas comparison
Unlike Greece today, Argentina's government had an arsenal of financial tools in 2001 to deal with its crisis. It devalued the peso and imposed capital controls. But as a member of the European Union, Greece does not have those options; it can't devalue, and because the Union has rules that call for a free movement of capital within its boundaries, it can't stop citizens or businesses from moving cash from one partner country to another.
"The only way Greece could impose capital controls would be to leave the EU," says Michael Melvin, head of currency and fixed income research at global asset management firm BlackRock. "And there's close to zero probability of that."
A return to the drachma isn't likely any time soon either, but Greek citizens do have good reason to believe that taxes are going to go up. The socialist government of Prime Minister George Papandreou has already announced a slew of tax hikes, including increases in the value-added tax, new excise taxes on luxury goods, such as yachts and cars, and up to a 20% tax on cigarettes, alcohol and fuel.
In addition, a key tenet of the socialist government's plan is to go after tax cheats aggressively -- economists figure that nearly 30% of the country's gross domestic product goes unreported to authorities. For decades, Greece's shadow economy has thrived because many Greeks -- doctors, plumbers, electricians and lawyers among them -- conduct business entirely in cash. Much of that money has ended up in bank accounts in other countries, say economists -- and a lot of it is not reflected in national statistics.
"The outflow of cash from Greece is not a new phenomenon. If you could calculate the outflow of the last 50 years, you'd get an astronomical figure," says University of Maryland economics professor Theodore Kariotis. "Greeks are a very sneaky people."
The government's new rules intend to change that. Last week it announced new measures to encourage those who have transferred money out of Greece to bring it back within six months, no questions asked. They'll be taxed 5% on the total, however. Another option offered: declare the money, leave it in foreign accounts -- and be subject to an 8% tax. After that, foreign governments will cooperate with Greek tax authorities to pursue lawbreakers, says a source in the finance ministry.
Greek Finance Minister George Papaconstantinou hopes the government's new measures will produce results. "As the reform program unfolds, a lot of this lost, or quasi-lost, liquidity will come back to the system," he said in a mid-January interview. "It is an immediate concern, of course, but it is reversible."
Maybe it is, but according to economists, money that leaves a country rarely returns. "I'm not holding my breath," says Global Financial Integrity's Kar. "Once [cash] leaves, it's hard to get it back."
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