One small step against the shadow economy

Posted on May 5 2016

I am pleased to note the FT reporting that the European Central Bank has announced there will be no new issues of €500 notes. The last was in 2014.

This is a necessary but small step forward in the fight against financial crime, where it is believed that the use of such notes (which represent 30% of all euros in issue by value but are almost never seen) is commonplace.

The FT reports hostile reaction by libertarians and cash savers in Germany and Austria. I have little sympathy. They are not being prevented from doing anything and a greater good is being served. This is a step in the right direction.

The US, Swiss, Japanese and even the UK £50 note (which is almost never used in normal use) should go the same way.

PS As an afterthought, I reluctantly bought a new television at the weekend, and only because the last had ceased to function. When asked how I wished to pay cash was offered as an option so I quizzed the salesperson on its use. The previous customer had apparently paid £6,000 in cash and this is, apparently, commonplace.

If I was HMRC I might be looking at that: names and addresses have to be supplied when buying televisions.

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2 Responses

  1. Pilgrim Slight Return says:
    May 5 2016 at 7:58 am

    The US? Some hope?

  2. Alan M says:
    May 6 2016 at 10:15 am

    Not too long ago I was looking at a ‘new’ used car. The dealer had one or two open-top sports models and I asked if there was much demand. He told me he’d sold two that week, one ‘sight unseen’, for cash and opened the office safe to show me the carrier bag full of used notes that one customer had handed over!

    Whilst I applaud the move in respect of the 500€ note, it might have been more helpful to announce that they would cease to be legal tender in say 12 months but in the mean time could be exchanged for lower denomination notes subject to money laundering checks.

    (PS most of those in circulation are apparently in Spain, where they’re known ( we’re known perhaps) as Bin Ladens’s because they were very rarely seen!)