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Former President of SNB says Switzerland should stick to 1,000 franc note

Categories : Cash is trust
May 31, 2016
Tags : Central Bank, Denomination mix, Europe, Money laundering, Store of value
The former President of the SNB states that "The decision to stop issuing high-denomination banknotes will receive the blessing of well-meaning souls but it will fail to meet its objective of fighting efficiently against criminality and will have negative side effects."
Guillaume Lepecq

Jean-Pierre Roth, former President of the SNB (Swiss National Bank) and Chairman of BCGE (Banque Cantonale de Genève) has published an opinion piece on the bank’s website stating that “The decision to stop issuing high-denomination banknotes will receive the blessing of well-meaning souls but it will fail to meet its objective of fighting efficiently against criminality and will have negative side effects.”

Roth emphasizes four reasons why the Swiss National Bank should not drop it’s highest denomination.

Firstly, it will not deter crime or tax evasion as other instruments, including bitcoin, are readily available.

Secondly, high-denomination notes are an important store of value, especially for small savers. Their elimination will restrict their freedom and reinforce financial repression through negative intetest rates.

Thirdly, the cost of production of cash would increase and seigniorage decline.

Lastly, if they are no longer issued, the demand for high-denomination notes would increase due to scarcity.

Read the original article here.

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