END OF ERA: 500 euro bills will no longer be provided by banks in the euro area
• Denmark has announced that it will pass a bill in which it will not honor the 500-euro bills on its territory
It was controversial from the moment it was issued, allegedly being used to launder capital and finance terrorist acts, and was finally announced three years ago. But this coming Friday, the regular supply of the euro-500-euro note will be stopped entirely in the European Union. The central banks of Austria and Germany will join the other central banks in the Eurozone on April 26, who have already taken the move three months ago and will no longer supply the bills to anyone. However, it is important to note that the 500 euro bill will remain valid and respected without any time limit.
The decision to stop with the provision of 500 euro bills was received in May 2016, by the Board of Directors of the European Central Bank (ECB). The decision stemmed from the fact that the high value of the notes makes them ideal for money laundering among countries, for the election of gangs of criminals who need to transfer large sums, to drug dealers, and to finance terrorist activities. In a certain period, the notes were labeled “bin Laden’s bills.” While the printing of the notes was completed in 2014, the European Central Bank decided that by the end of 2018, their supply to the markets by the central banks would also cease.
The central banks of Germany and Austria, whose economies had the highest number of notes, received a four-month extension and announced that they would stop issuing the bills on April 26 this Friday.
The ECB’s move is against the German central bank’s position that “there is no empirical evidence that the removal of banknotes at a higher turnover will help combat tax evasion or criminal acts.” Unlike other countries, the use of cash and not credit cards is very popular in the German economy.
In any case, the 500-euro bill is in constant decline: according to the European Central Bank, while in 2016 there were 540 million bills of 500 euros in circulation, their number in March fell to 504 million notes and the trend is expected to strengthen now. Next month, a new series of euro notes will be launched, the highest of which will be the yellow 200 euro.
The holder of the most valuable note in Europe is the Swiss franc 1,000 (about € 875). Berne firmly opposes the demands of international bodies, including organizations to combat money laundering and transparency, to stop issuing the popular note. EU member Denmark, for its part, sparked a storm earlier this month when it announced it would unilaterally cease to honor 500 euro bills because of their involvement in money laundering. The government informed the European Central Bank that although the move is contrary to EU agreements, it is justified in preventing criminal activity. The Danish parliament is to approve the proposal, which could take effect in January 2020.