Article by Wajeeha Ashfaq Hamdani from Economics Wing, GAEE JMI

Background:

The popular show “Lacasa De Papel” (Translation: Money Heist) is undoubtedly one of the best shows on television today. While we all enjoy Professor’s “backup plans” that save the day or the adrenaline rush throughout the action, can we call “money heist” realistic in terms of economics?

Introduction & Purpose of National Reserves:

National Reserves are a country’s assets that back its currency and monetary deposits in banks. They can be in the form of precious metals such as gold, foreign currencies, or other highly liquid assets such as cash.

These reserves are essential because they meet a country’s central bank and government treasury’s current and near-term financial obligations—these holdings aid in regulating the nation’s money supply and the management of liquidity in global markets.

As a natural inflation hedge, gold has a prominent place in National Reserves.

Map of the Big Theft:

The most recent season of Lacasa De Papel revolved around the meticulously planned theft of 90 tons of gold from the Bank of Spain. The plot twist was how the Professor convinced the government to let the gang escape. 

He was able to get away with it by threatening to reveal that the gold was gone. It worked because the economy would collapse without assets to back it up.

The Golden Illusion vs. the Pandemonium in Reality:

Gold is a symbol of economic health, and banks use it to hedge against loan defaults. Central banks buy gold because it is their primary responsibility to maintain steady economic growth. Central banks can limit market expansion by buying and selling gold. 

While purchasing more gold increases the currency’s value, selling gold decreases its value. Gold acts as a safety net for the government, instilling trust in lenders and the general public. It is an asset that represents a country’s wealth and helps it to be financially strong.

‘Checkmate’ by Professor:

Let’s take a step back and look at the mechanics of the iconic “checkmate.”

The public would first panic, fearing their financial security, and begin selling their stocks. The stock market would crash quickly, causing a domino effect.

Moreover, Spain’s debt is based on its National Reserves. In the absence of reserves, international creditors would demand immediate repayment. In addition, there would be no backup for printing more currency. The national debt would skyrocket, the stock market would crash, and the country would sink into deep poverty.

The Professor reasoned that because the Bank of Spain does not purchase anything with the gold, it is “merely psychological,” implying that it is sufficient to know that the gold is present to ensure the smooth operation of the economy. It makes no difference if it’s brass if the rest thinks it’s gold.

Everything will be as expected if everyone believes gold is secure because gold is, in fact, an illusion, merely a symbol of wealth. Creating this illusion would save Spain from all of the disruptive chaos. But what about Open Market Operation, in which one may be forced to sell some of one’s gold?

Examples of Open Market Operations:

During economic crises, the government may sell reserves to stimulate the economy or pay off debts. With its economy battered by the pandemic, Turkey, for example, sold 22.3 tons of gold. Meanwhile, Uzbekistan has sold 34.9 tons of gold. Consequently, in the Money Heist, successive governments would have to gradually rebuild reserves by purchasing actual gold to replace the brass.

Bottom Line: National Reserves are the safety net of a country’s economy 

To conclude, National Reserves may be an illusion in the short run when they aren’t used, but they serve as a symbol of prosperity too. A country may need to use them to correct an economic disruption in the long run.

Tokyo, one of the show’s main characters, flawlessly explained how the reality of gold as a country’s safety net can leave a whole nation in chaos and turn into an illusion if gold reserves are stolen or underutilized.

She says, “No other metal’s gotten so many people killed as the one that we use to propose to someone. No other metal’s caused this much pain and this much madness.” 

Therefore, National Reserves, particularly gold reserves, serve as the pillars of all domestic and international transactions. Overall, the theft of a country’s gold reserves would be dangerous.

Article Summary:

This article discusses the National Reserves and their purpose, relating the gold reserves in particular to a theft in the show “Lacasa De Papel,” also known as “Money Heist.” As a result, the theft of the 90 tonnes of gold in the show’s most recent season has been given prominence in order to highlight the Professor’s escape plan. The author provides additional examples of the use of National Reserves by countries such as Turkey and Uzbekistan in the event of economic crises during the pandemic to emphasize the scenarios of Open Market Operations. Finally, it is concluded that the National Reserves, specifically gold reserves, serve as the foundation for all domestic and international transactions. 

(Wajeeha Ashfaq Hamdani is a B.A.(Hons.) Economics student at Jamia Millia Islamia, Delhi, and a part GAEE JMI, an autonomous branch of Global Association of Economics Education in India. The views expressed are personal and they do not purport to reflect the opinions or views of GAEE or its members.)