The FT has noted a consultation announced by the Treasury yesterday, saying:
The Treasury asked on Tuesday if the current mix of eight coins and four banknotes “meet current and future needs”.
Noting the decline of cash payments and corresponding rise of digital and contactless technology, it pointed to the perception that £50 notes “are used for money laundering, hidden economy activity and tax evasion”.
The Treasury said £50 notes were “believed to be rarely used for routine purchases and instead held as a store of value”, adding this “does not contribute to an efficient of cost effective cash cycle”. “Though the value of the £50 note is low compared to other countries' highest denominations, in order to attempt to tackle the hidden economy and illegitimate use of cash . . . some countries have removed their highest value notes from circulation,” the report said.
Three thoughts.
First, this has been known for some time. I have written about it. Why has it taken so long to act?
Second, if the state is facilitating crime and not aiding the real economy with the existence of this note, why take time to consult? Why not act?
Third, what action is going to be taken on all the notes that will now enter the banking system as value is claimed? Will the deposits be traced and investigated given that most are expected to be held for criminal purposes. And if not, why not? Isn't that the most interesting possibility here?
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Removing the £50 note will be a nice little distraction. Certainly it’s been on the cards for a while, and both the Fed and ECB have been actively withdrawing their large denomination notes if they haven’t completed the process.
As you say the cash economy is relatively small beer in the overall scheme of tax abuse, but it will earn lots of media coverage and create the impression that the government is ‘doing’ something.
You can fool some of the people….
I believe that this is just a way of making the UK a cashless society.
Just think of the possibilities. Every transaction auditable by the authorities, every transaction sold to the large corporations for marketing purposes.
It wouldn’t get rid of the black economy anyway, people would just use another currency.
I think the removal cash is a bad thing.
I think the chance that it would promote shadow currencies is high
I think the complete removal of cash would also further blur the distinction between private bank created money and money directly created by the government. Might this just serve to might further empower the private banks?
Also It’s already hard enough for non-economists/non-accountants to get our heads around the modern money system.
More importantly; how would all the losing poker players at my casino quickly reload and keep playing if they weren’t able to peel off another wadge of fifties? 😉
That will only leave the £20 for you to rip in half then Richard. Might have to pack scissors in future 🙂
Bloody annoying…