5 May 2016

Taking our cash away: the removal of high denomination notes

In May 2016 the European Central Bank announced that it would stop issuing EUR 500 notes in 2018.

The reason given for the abolition is that the high value note is used mainly for criminal and “grey” payments, so doing away with it will lessen tax evasion and more serious crime. Evidence for all this is a little thin, and my guess is that abolition will at best slightly hinder such payments.

Criminals use cars, but that it not a sufficient argument for their abolition. Ordinary people need cars, too. Likewise high denomination notes are mainly used by ordinary people for several purposes: to store their savings, to easily transport their money, to make instant payments, to avoid bank fees, and, of course, to make anonymous payments. The right to privacy in, say, buying a medical product does not signal any kind of criminality.

What the ECB is doing is quite simply diminishing, albeit slightly, people’s freedom, and handing power to fee-sucking banks and to the surveillance state.

Of course the situation is much better in the Eurozone than it is in Britain, where the highest denomination note is GBP 50, around 63 Euros at the time of writing. British shopkeepers often gasp in horror whenever a “fifty” is tendered. And today in Britain even the GBP 50 note is under threat of abolition to make cash retention, transfer and payment more difficult.

The right to hold one’s money in cash is a fundamental. Phasing out the EUR 500, but retaining the EUR 200 and EUR 100, both greater in value than the British GBP 50, is no huge deal. But going any further down this road is.

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