Street Life: Samotechny Lane - The safest banks are made of glass and smell of strawberries

THE RUSSIAN word for bank ("bank") is very close to "banka", the word for jam jar. Given their bitter experience with banks, most Russians prefer to keep their savings at home in jam jars. Last week, there was panic in Moscow as it appeared the taxman was about to lift the lid on the National Banka and stick his spoon in the dollar preserves.

I heard about this from a friend, who I had better call "A" and say only vaguely that she works in trade. If you have ever wondered how Russians survive when, officially, they have almost no money, then A's story is instructive.

She told me that on paper she earns the rouble equivalent of $200 a month. The taxman takes so much of this that it amounts to Communism through the back door. For her to actually have $200, her employers pay her again from a hidden fund. Then they add a bit more, so that her real salary is closer to the rouble equivalent of $500. Almost all firms do this, apparently.

If the rouble was worth six to one dollar before August's economic meltdown, it stands today at about 21 to 1. Thus, as soon as A gets her wages, she works out how much she needs to spend on food and bills, changes the rest into dollars, which are more or less inflation proof, and puts them in her jam jar. She has about $4,000 in the jar, which represent over a year of saving. When she spoke to me, she was frightened.

"The tax police could turn up at any moment and search me. It would only take an envious neighbour to ring up and say I was living too well and they would be knocking at my door. It is like in Stalin's time," she said, close to tears.

At present, television is running an advert made by the furtive methods of Jeremy Beadle. An interviewer asks passers-by if they love Russia. Naturally, they all reply in the affirmative. Then the interviewer reveals himself as the taxman and asks them: "Do you pay tax?" Their embarrassment is hilarious.

The immediate reason for last week's panic, however, was that a law was coming in, under which consumers who bought items such as flats and cars had to prove they had legally amassed the money to do so. In addition, the law tried to "out" the millions of poor-looking but in fact quite comfortably off Russians by demanding that those with "large sums" at home put them in the state savings bank.

The only snag was that the law was drafted before devaluation when "large sums", defined as 1,000 or more times the minimum wage of 83 roubles, meant anything above 83,000 roubles or nearly $14,000. Today, 83,000 roubles are worth less than $4,000.

Small fish like A saw the net closing in. "Why should I put my savings in the Sberbank (Savings Bank)?" she asked, "when I lost 2,000 roubles there in 1993 - and in those days that was a lot of money."

She was referring to the time the former prime minister Yegor Gaidar bungled a money reform, with the result that millions saw their savings become worthless.

A, who still lives in a communal flat, sharing the facilities with two other families, had been hoping to buy a self- contained apartment. With the money reform, that dream went up the spout.

Having been burnt, A put her faith in dollars, distrusting banks that were not made of glass and did not have a faint, lingering smell of strawberries. Others put their money in new commercial banks, where it became possible to hold dollar accounts. Since the crisis, five of these have been declared insolvent and more Russian savers have been convinced of the advantage of jam jars.

"If rates were reasonable, I would gladly pay tax," said A. "If banks were reliable, I would use them." She added that she would probably spend her savings on a trip abroad and "eat a lot, so that I get fat, not the taxman".

As it happened, at the end of the week, the State Duma postponed implementation of the law. The panic was over, until the next time.