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Banknotes aren’t for criminals

Categories : Cash is universal
July 6, 2016
Tags : Distrust, Fraud, Freedom, terrorism
Abolishing high denomination notes is not the answer to counter terrorist and criminal activities - and it limits people's freedom.
Communication Team / Equipo de Comunicación

The ECB has decided to stop issuing the €500 note due to its seeming link to criminality. Unfortunately, this claim has never been proven by an in-depth empirical study on the subject. In fact, “today most criminal activities are happening online and through electronic means of payment, not through cash”. Terrorists use other, more complex means as they are less conspicuous and offer the freedom to transfer large amounts across the globe without having to travel with a suitcase full of bills.

All weapons and explosives used in the Paris terrorist attacks in November 2015 were purchased by other means than cash. The same trend was recorded in Australia where the Somalia-based terrorist group, Al-Shabaab, used false names to transfer money.

The desire to abolish high denomination notes is mostly supported by banks who wish to gain more interest. In fact, the majority of €500 notes were used for hoarding purposes (they represent 3.2% of euro banknotes in circulation but 30% of euro cash stock value). As mentioned in a Financial Times article, the cost of a safe deposit in a bank is 6 times higher when hoarding €3 million in €50 notes vs. the same amount in €500s (€380 vs €60). 

Having access to high denomination notes offers the public the liberty to choose how they want to store their money. Abolishing these notes not only results in a loss of freedom but it also strengthens the bank lobby while terrorists continue to finance their grisly activities, undisturbed. 

To read the Global Treasury Intelligence article, click here