Material World

As I was leaving Italy after Milan Fashion Week, I was chatting to Guglielmo Miani, the young-ish CEO of Larusmiani, a family-owned manufacturer of luxurious materials, when he let drop an interesting fact. Last week the Italian government quietly changed the law it passed in November that banned retail establishments from accepting more than €1,000 in cash. Surprise!

What changed?

Now, retail establishments have no limit on the cash they can accept from foreigners, as long as they take a photocopy of said foreigner’s passport. I’ll say that again: no limit. Italians are still restricted to €1,000.

Why did this change?

Mr Miani is also president of the Associazione della Via Montenapoleone, a lobbying body composed of the 60 stores on Milan’s primary luxury shopping street, Via Montenapoleone. He and his compatriots wrote to prime minister Mario Monti pointing out what, in their eyes, is a large amount of money lost since the law came into effect. Dolce & Gabbana complained about the same issue when they had lunch with the FT.

“Eighty per cent of our consumers are tourists,” said Mr Miani and the average transaction is more than €1,000. Of those tourists, 12 per cent are Chinese and “who always have cash,” says Mr Miani. “They buy for their friends, they give them cash!”

Otherwise, 30 per cent of foreign consumers are Russians and 3.5 per cent are Brazilians, who also use cash as ”they are taxed on credit card transactions,” said Mr Miani. “We were losing one out of every three international customers.”

It was hurting Italy financially, he claimed.

“How do you tell someone you can’t take their money nicely?” Mr Miani asked. “They feel bad! They think you are suspicious their money is bad. They get offended. This is bad for Italy.” Anyway, he said, the government understood, and acted accordingly. “We support what they are doing to change behaviour in Italy,” he said. “But this isn’t about Italians. This is about our tourist industry.”

And you thought a handbag was only a handbag. Pshaw.

Here is the link to the law (in Italian):
http://www.governo.it/Governo/ConsiglioMinistri/testo_int.asp?d=66860