They call it Bin Laden – people know what the 500 euro note looks like but have never met it. Binning the «Bin Laden» was proposed by Europol in light of its report last summer titled «Why is cash still king» stating that an increasing amount of shops refuse to accept it while the €500 notes still account for nearly a third of the notes in circulation.
An extreme example cited by the report being Luxembourg where 500 euro notes were emitted for €87.5bn in 2013 which is twice their yearly GDP. Meanwhile, Luxembourg is considered to be a leading cash free nation in the eurozone.
An investigation published last year by Italian central bank showed the €500 note to be used by mafiosi money launderers, terrorists and tax evaders as the large money is easier to hide and transport.
On Friday, the Europol proposal was discussed by European finance ministers who forwarded the analysis to the European Commission. The commission is supposed to draw its conclusions and make its suggestions by latest May 1st.
Addressing the European Parliament this Monday, ECB president Mario Draghi said savers would not be punished by the step as they will have €200 notes left to collect. «People will retain the 200 euro note,» said Mr Draghi. «Increasingly, the 500 euro note is seen as instrument of illegal activity. This has nothing to do with shrinking the cash mass,» he added.
«500 euro notes are used more for hiding than buying,» the French finance minister Michel Sapin said on Friday.
The UK was fed up long ago. The British banks and forex companies quit accepting the €500 notes in 2010 after research showed 90 percent of those interested in it as belonging to criminal circles.
Meanwhile, the discussion to remove large notes has gathered steam.
Last week, a report by former Standard Chartered chief Peter Sands report stated that notes like €500, $100, Swiss 1,000 franks, and £50 ought to be removed from circulation.
According to former US treasury secretary Lawrence Summers, all nations might quit printing big notes. «Better than the unilateral European measure would be a global agreement to stop the emission of $50 or $100 notes, say,» he wrote in his Washington Post blog on Tuesday. «Such an agreement would be as weighty as any G7 or G20 nations agreement,» he added.
Some say the removal of €500 is an attack against the importance of cash in economy. Among others, the camp features Austrian deputy finance minister Harald Mahrer.
«We do not want anybody to be able to digitally monitor what we buy, eat and drink, what books we read and which movies we see,» Mr Mahrer told Austria’s public broadcaster Oe1 on Friday.
Resistance may also spring up in Germany which was the first to adopt the 500 euro note as an approximate equivalent to one-time German 1,000 mark. In bigger buys, the Germans tend to favour paying cash.
Germany’s largest tabloid Bild has launched a letter-sending campaign «Hands off of our cash» addressed to finance minister Wolfgang Schäuble to protest an upper limit to cash payments. Many are of the opinion that the binning of 500 euro notes is linked to that, wrote Financial Times. Last week, Bild said it has already gotten 10,000 letters.
Still, there are prior cases of large notes having to go. In 1969, the USA stopped emitting $500, $1,000, $5,000 and $10,000 notes. Though these are no longer printed, they can be used for payments till today. As at last year, these amounted to a total of $300m though mainly they are being collected and thus probably of higher value wrote The Wall Street Journal.
Estonia prefers €50 notes
Rait Roosve of Eesti Pank said the central bank data shows quite a popular use of the €500 notes: «According to our data, there are rather many transactions with €500 notes; for instance, in 2015 Eesti Pank issued €50 in largest quantity (for about €634m) as followed by €500 notes (for about €283m),» he added.
Which sectors have the largest amounts of €500 notes used, it’s difficult to say. Tallinna Kaubamaja told Postimees that they rarely see the notes as clients prefer card payments.
In Estonian underworld, €500 is quite a rarity as well.
«Police indeed confiscates large amounts of cash from time to time, by a €500 note is quite a rarity,» said Roger Kumm of Northern prefecture. «To hide criminal income, crooks tend to use smaller notes as these are widespread. The criminals also need smaller notes for transactions and other use. Most often, the police run into €50 notes and smaller, and occasionally the €100,» he added.