The Spanish government has opened an investigation to learn why nearly a quarter of the €500 bills in circulation are currently found in Spain and to determine whether it was the result of illicit activity, officials at the Ministry of Economy said Wednesday.

Government officials and outside analysts say that the high number of bills reflects a large black market economy, extensive tax evasion, and perhaps considerable levels of money laundering and corrupt business practices.

The €500 bills, worth $618, are seldom seen in everyday commerce in Spain, but officials at the Ministry of Economy say that there are more than 90 million of them here, or about 25 percent of the total. About 10 billion bills of all denominations are currently in circulation, according to the European Central Bank.

"If you consider the size of the economy, Spain has many more of these bills than you would expect," said a spokesman for the Ministry of Economy, where protocol dictates that press officials speak on the condition of anonymity.

"We would like to know why," he said, adding that it was too early to say whether the cause was illicit activity.

Gestha, an association of tax professionals in Madrid, has been calling for an investigation of the bills for months, speculating that they were a result of corruption connected to the booming Spanish real estate market.

Housing prices in Spain have more than doubled since the late 1990s, driven by rising incomes, immigration, and low interest rates set by the European Central Bank. According to the Ministry of Housing, unsubsidized house price growth slowed slightly in the last quarter of 2005 but was still up by an annual 12.8 percent.

Spanish investigators say that city governments in Spain have become increasingly vulnerable to corruption during the boom, as developers lobby them to hand out building licenses and to approve rezoning requests.

When the euro went into regular circulation in 2002, hardly any of the €500 notes were in Spain, partly because it was not one of the countries initially authorized to issue them. But the number has grown steadily since then, increasing by more than 30 percent in 2005 alone, according to the association of tax professionals.

This sharp growth and the suspicions that it is linked to illicit activity have led to calls that the bills be withdrawn from circulation from some industry groups and associations.

But government officials have rejected the requests, saying among other things that the bills are an important tool for investigators who track money laundering.

"Killing the €500 euro would deprive us of an important piece of information" in the fight against money laundering, Soledad Núñez, director for political finance at the Ministry of Economy, said at a conference on money laundering in March, according to the state-financed news agency EFE.

But Alejandra Gómez, a criminology professor at the University of Malaga, said in an interview that the presence of large bills does not generally indicate money laundering. "Laundering of large sums of capital is usually done through institutional channels," she said.

"The only thing these bills indicate for sure is that there is a high-level underground economy here," she added.

The large bills could be from drug dealing or corrupt activities in booming industries like real estate, she said. But the most likely explanation is that many Spaniards are trying to hide their income and wealth from the government.

"What this tells us is that there is a significant level of tax evasion in Spain," she said. "Much of the population does not believe tax evasion is a serious crime."

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