Did drug money keep the banks high and dry?

A little known but striking comment from the then executive director of the United Nations Office on Drugs and Crime on how illegal drug money was the only thing that kept the banks afloat during the 2008 crash.

Vienna-based UNODC [United Nations Office on Drugs and Crime] Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.

“In many instances, drug money is currently the only liquid investment capital,” Costa was quoted as saying by Profil. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

The United Nations Office on Drugs and Crime had found evidence that “interbank loans were funded by money that originated from drug trade and other illegal activities,” Costa was quoted as saying. There were “signs that some banks were rescued in that way.”

Link to Reuters reporting of interview.

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