The Real Reason Why Authorities Want To Ban High Denomination Bank Notes

[FunkyMike]

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Over the past month, one of the more alarming developments in Europe has been the move to eliminate high denomination bank notes like the €500 bill.

Indeed, as Bank of America reports, having changed its mind on the matter over the past few years, the ECB is now considering abolishing the €500 note. In a recent interview, Executive Board member Benoit Coeure said that "the ECB is assessing the fate of the €500 euro banknote, as concerns about its use in money laundering and crime grow and its usefulness for large payments comes into question" adding that "competent authorities increasingly suspect that they are being used for illegal purposes, an argument that we can no longer ignore." (like all other ECB matters, there appears to be infighting on this issue too, and subsequently another ECB member Yves Mersch statedthat the he would like to see "proof that high-denomination notes are used by criminals").

So what, big deal, eliminate it. The people will still have 5, 10, 20, 50, 100 and 200 euro bills right.

Well, here's the thing: the €500 note is the second highest currency denomination in G10, after the CHF1,000 note. More importantly, the total value of €500 notes in circulation amounts to €306.8bn and has been rising.

As a share of the value of total euros in circulation, the €500 note is the second-highest, after the €50 note.

In other words, if overnight the €307 billion worth of €500 bills were eliminated, the notional value of the entire amount of European physical currency in circulation would decline by 30% to €700 billion!

And there you have it: while it may not be banning all European cash outright, we are confident the ECB would be delighted if one third of it was to start, while pretending to be fighting financial crime, terrorism, corruption and dryg dealers. 

Of course, what Europe would be truly doing is setting the scene for ever more aggressive NIRP, and by removing the highest denomination bank notes, it would make evading negative that much more difficult and costly (albeit would certainly favor gold).

Here Bank of America points out that while abolishing the €500 note may even end up weakening the EUR currency. ...

 

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Ok fine, remove the $100 bill: surely it won't affect much right.

Wrong. As the latest Treasury data shows, $1.08 trillion of the total $1.38 trillion in physical US currency exist in the form of $100 bills.

 

 

In other words, there is now an all too explicit "trial balloon" push to ban the one banknote that accounts for a whopping 78% of all US currency in circulation.

So there you have the real reason why suddenly high denomination bank notes are the target: it is not because "drug dealers" and tax-evaders use them, but because between banning Europe's €500 bill and the US $100 bill, over 56% of all physical currency currently in circulation in Europe and the US would disappear.

And all in the name of "fighting crime", when the real reason is to set the stage for NIRP and to progressively move down the chain and ban increasingly smaller denominations.

Will this drive to start the elimination of physical cash succeed? We don't know, but for once the Greeks are far ahead of the curve. As Kathimerini reports, "citizens who keep cash outside the banking system are running in droves to bank branches to ask for details and clarifications on reports that the European Central Bank is planning to withdraw 500-euro notes."

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There is the question whether this no to clever ploy will backfire, and instead of forcing people out of cash, instead lead to a run on bank cash, which will then be converted into physical precious markets. The Greeks have already figured it out; we wonder how long until the US population follows suit.

 

http://www.zerohedge.com/news/2016-02-11/here-real-reason-why-authorities-want-ban-high-denomination-bank-notes

[ctebah]

It does make sense.  Banks are starting to hate cash.

[Torolol]

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albeit would certainly favor gold

somehow i suspect ECB would eventually do something like FD Roosevelt did, demand some heavy regulations on gold ownerships & circulations.

[ramesees]

23 minutes ago, Torolol said:

somehow i suspect ECB would eventually do something like FD Roosevelt did, demand some heavy regulations on gold ownerships & circulations.

Why do you think there has been such a proliferation of "We buy Gold for cash" businesses opening up in the past number of years ?

 

Take the actual gold out of the hands of the "little people" and replace it with cash - bits of paper that has no inherent value and is backed by nothing.

[Noir Angel]

Then the solution is obvious: As you pull the old notes from circulation, just replace them with lower denomination notes of equal value. I can honestly say I've personally never carried, nor needed a note denomination higher than £20 so I can see their point.

[SIE]

8 minutes ago, Javik said:

Then the solution is obvious: As you pull the old notes from circulation, just replace them with lower denomination notes of equal value. I can honestly say I've personally never carried, nor needed a note denomination higher than £20 so I can see their point.

I bet this applies to a lot of people in the UK mate, as very few places will accept £50 notes anyway.

[Noir Angel]

11 minutes ago, SIE said:

I bet this applies to a lot of people in the UK mate, as very few places will accept £50 notes anyway.

Yep, you're probably right. Nobody I know ever uses £50 notes. Even my mum, about as tech unaware as people get now knows how to do chip and pin payments, it's slowly but surely making large value notes obsolete.

[Thomas the Tank Engine]

We still had $1000 bills until 2000 here in Canada, when it was finally withdrawn.  And we also had $500 bills in the early half of the 20th century.

[compl3x]

$100 is the highest in Aus. Although that is only worth about 60 US cents. 

 

People want to get rid of small change and large notes.

[Thomas the Tank Engine]

36 minutes ago, compl3x said:

$100 is the highest in Aus. Although that is only worth about 60 US cents. 

 

AUD$100 is worth USD$72....

[+InsaneNutter MVC]

Most people manage fine with £20 notes here in the UK (seen a £50 note a couple of times at the most), I cant see it been much of a problem if eventually the lowest in Europe is 200 euros.

[compl3x]

1 hour ago, Thomas the Tank Engine said:

 

AUD$100 is worth USD$72....

 

Yeah, I know. It was a joke about how much the worth of the Aussie dollar has fallen. We were almost at parity about a year and a half ago, today it is about 72cents USD.

[Thomas the Tank Engine]

5 minutes ago, compl3x said:

 

Yeah, I know. It was a joke about how much the worth of the Aussie dollar has fallen. We were almost at parity about a year and a half ago, today it is about 72cents USD.

 

You think that is bad, the Canadian dollar is the lowest it has been in approx. 11 years: CAD$1.00 is currently worth USD$0.73.  While it's good for americans to come to Canada and buy goods, it worse for us, because if we go across the border to buy anything, it ends up being even more expensive than it should be.

[FunkyMike]

On 2/13/2016 at 3:41 AM, Javik said:

Yep, you're probably right. Nobody I know ever uses £50 notes. Even my mum, about as tech unaware as people get now knows how to do chip and pin payments, it's slowly but surely making large value notes obsolete.

The issue is that this maneuver is part of a larger idea to introduce a negative interest rate policy. If you are holding 200k in your HSBC account and you are suddenly told that you will get taxed at 1% / 2k a year and are not able to withdraw your funds easily it will make you an easy target.

 

The endgame is to tax people via easier means like it was done in Cyprus in case the economy does another Lehman type event. Not many people realise this but a lot of businesses require cash in the UK. Clubs, small to medium sized businesses, cornershops, landlords, strippers.. London wouldn't wouldn't be able to function without cash .. be it 20 or 50 pounds. Once they start imposing heavier restrictions on the maximum amount allowed for transactions via cash  it will make life more painful. In Italy you cannot buy goods over 1k Euros in cash without getting logged into the system. Germany it is around 4k Euros.

 

On 2/13/2016 at 2:43 AM, Torolol said:

somehow i suspect ECB would eventually do something like FD Roosevelt did, demand some heavy regulations on gold ownerships & circulations.

I think the limit for buying gold in the UK is 10k pounds worth per year. Anything above that and you get logged into the system by the dealer.