By Richard Giedroyc
The future of the 500-euro bank note, the highest denomination currency unit issued by the European Union, is coming into question, particularly by law enforcement.
The 500-euro ote was equal to about $560 U.S. at the time this article was being written. As such it is one of the highest denominations of physical cash currently in use anywhere.
The United States last printed high denomination notes on Dec. 27, 1945. These high denominations were officially discontinued by the Federal Reserve System on July 14, 1969 “due to a lack of use.”
President Richard M. Nixon issued an executive order through which the Federal Reserve began removing and destroying these notes when they were received by local banks. Today the highest denomination of physical currency used by the United States is the $100 note.
As of 2009 there were 165,372 $1,000 notes still outstanding.
Canada retired its $1,000 note on May 12, 2000. As of late 2012 the National Post reported 946,043 notes of this denomination still outstanding. “Pinkies,” as the notes were nicknamed allegedly by criminals are still legal tender as are the U.S. notes. Also like Canada’s U.S. counterpart, the notes are destroyed if redeemed or deposited at a bank.
According to a Nov. 15, 2012, National Post article, “Money-laundering experts believe most of the missing bills continue to circulate among criminal elites who use them to pay large debts, with the recipient, in turn, using them to pay their own debts with only a portion of the notes bleeding off into the legitimate banking system.”
Jeffrey Robinson has authored several books on money laundering. At the time of the 2012 article Robinson said, “They are used now to pay off IOUs, not as traditional cash. They are used for buying and selling but not for cashing, because they know if they cash them, it is traceable. They keep paying with them, over and over, and it’s only the last guy in line who has to worry about cashing them.”
Bank of Canada spokesman Jeremy Harrison added that the notes were retired as part of the fight against organized crime at the recommendation of the Royal Canadian Mounted Police.
This is where the major complaint is originating concerning the 500-euro note. Great Britain banned exchange offices from selling the notes in 2010 due to concerns regarding criminals. The highest denomination bank note issued in Great Britain is the £50, valued at about 66 euro or $73 U.S..
If the EU stops issuing the 500-euro note Switzerland could become the next concern to law enforcement since the highest denomination bank note there is the 1,000 franc, a note valued at about $1,003 U.S.
The European Interior Ministers and Europol police formed a new counter-terrorism unit on Jan. 25. One of the new unit’s missions is to stop the flow of money to militants. The following day European Anti-Fraud Office head Giovanni Kessler said, “I wonder if there is still a need for high denomination bills, such as the 500-euro bill, especially bearing in mind that these can make the life of fraudsters much easier,” adding, “Traceability is paramount in fighting corruption and fraud.”
Kessler said, ““We have a common market with no frontiers for goods, capital and people. Let’s have it for criminal investigations.”
Kessler is a former prosecutor of the Italian mafia. He favors small denominations of physical cash and the more widespread use of electronic money.
The European Central Bank in Frankfurt declined to comment on Kessler’s comments, however on Feb. 1 the London newspaper Financial Times reported, “The 500-euro note, beloved by gangsters and Greek savers, is now being investigated for ties to terrorism. The EU Commission on Tuesday will pledge to investigate the suspiciously high number of the notes in circulation in the eurozone as part of a plan to choke-off financing for terrorists in the wake of November’s attacks in Paris.”
The Financial Times reported that a draft of plans seen by the newspaper’s reporters reads, “The use of high-denomination notes, in particular the 500-euro note, is a problem reported by law enforcement authorities. These notes are in high demand among criminal elements … due to their high value and low volume.”
On Feb. 1 European Central Bank President Mario Draghi said, “We want to make changes. We are determined not to make seigniorage a comfort for criminals.”
It was recently reported that the 500-euro note accounts for about 23 percent of all the value of EU euro currency in circulation.
This article was originally printed in World Coin News.
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