European Central Bank to withdraw €500 note(bbc.com)
bbc.com
European Central Bank to withdraw €500 note
http://www.bbc.com/news/business-36208146
52 comments
I travel frequently between three countries, with three different currencies. For me, the larger demoninations are very useful -- say you need $5000 spending money for your trip to Country Two. If you can take 50x$100 it's pretty easy to manage; if you can only take $20 bills it becomes at least five times harder to manage.
This is a very real thing for many people with modest, entirely legitimate needs. People for whom the bank fees and profit-seeking exchange rates are a significant burden.
This is a very real thing for many people with modest, entirely legitimate needs. People for whom the bank fees and profit-seeking exchange rates are a significant burden.
I'd be paranoid carrying that much money a kilometer from my home let alone another country.
Depends where you live I guess, but it's not a crazy thing to do and I know a lot of people who do it. I myself rarely take more than a couple thousand over a border, but mostly because I'm afraid I'll misplace it or lose my wallet or something.
Seriously, you can easily spend $500 a day in San Francisco on restaurants and bars for two people, without going to anyplace really fancy.
Seriously, you can easily spend $500 a day in San Francisco on restaurants and bars for two people, without going to anyplace really fancy.
Yes, but most people would use a card.
But at the same time you would probably be comfortable driving a car worth $5000 a kilometre from your home.
I would not equate cash and a car one is easily stolen and disseminated.
I know carjacking exists but stealing untraceable cash versus a car is quite a different situation to me.
Plus I can drive really fast in a car but for the cash I'd have to be able to run faster than the other guy.
I know carjacking exists but stealing untraceable cash versus a car is quite a different situation to me.
Plus I can drive really fast in a car but for the cash I'd have to be able to run faster than the other guy.
Cash is traceable, each bill has a serial number. Totally agree that cash is easier to use after theft, but there is a huge market for stolen vehicles. They can be taken to a chop shop or even just loaded on a shipping container and sent to another country.
Somebody doesn't need to pull you out of the car, that rarely happens as compared to somebody stealing it out of your driveway or public parking while you're not nearby or asleep.
You can also easily see that somebody has a vehicle, but unless you run their pockets first or they're flashing it around you would not be able to know how much cash they have on their person or if they have any at all.
What makes you a target for robbery is not what you have on your person, it's what you display on your person. Nice clothes, pulling out an expensive phone, having a nice car, pulling wads of money out of your pocket or being intoxicated or otherwise unobservant will all make you a good mark.
Somebody doesn't need to pull you out of the car, that rarely happens as compared to somebody stealing it out of your driveway or public parking while you're not nearby or asleep.
You can also easily see that somebody has a vehicle, but unless you run their pockets first or they're flashing it around you would not be able to know how much cash they have on their person or if they have any at all.
What makes you a target for robbery is not what you have on your person, it's what you display on your person. Nice clothes, pulling out an expensive phone, having a nice car, pulling wads of money out of your pocket or being intoxicated or otherwise unobservant will all make you a good mark.
The point is to eventually get rid of cash.
Unless things have changed in the last 4 years I've been abroad, £50 notes are basically unused/deprecated anyway. In my entire 25 years I was living there I had never received one from an ATM, and even when I withdrew large quantities of cash from the bank branch itself it was always denominated in 20s and 10s. I've seen people trying to pay with them (usually foreigners, having exchanged the notes in their home country) and getting denied because cashiers are unfamiliar with them and couldn't tell a fake from a real note to save themselves. If you put a gun to my head I couldn't tell you what a Bank Of England 50 looks like without googling it - pink maybe? Only reason I know the Bank of Scotland one is because it won some award a couple years back (if you're into pretty banknotes take a peek here http://www.theibns.org/joomla/index.php?option=com_content&v...)
That said, removing them would be kinda silly IMO. It may solve the awkward "tourist buying a £3 beer with a £50 note" scenario, but you have that pretty much everywhere. I kick myself when I forget to hit the "Select bankotes" option at ATMs here because a 2000 CZK note is pretty tough to spend. That's maybe more because Czech bars/shops are awful at stocking their cash registers with enough notes for the day and the cashiers just simply do not have the change available.
That said, removing them would be kinda silly IMO. It may solve the awkward "tourist buying a £3 beer with a £50 note" scenario, but you have that pretty much everywhere. I kick myself when I forget to hit the "Select bankotes" option at ATMs here because a 2000 CZK note is pretty tough to spend. That's maybe more because Czech bars/shops are awful at stocking their cash registers with enough notes for the day and the cashiers just simply do not have the change available.
$100s are terribly useful. A majority of work I do with contractors I have to do in $100s because of check scams and because of credit card fees. Cash allows the transaction to happen without fear of fraud nor without losing 3-6% in cc fees.
I'd feel very weird carrying bricks of 20s from the bank.
I'd feel very weird carrying bricks of 20s from the bank.
How much are we talking about? You can use ACH transactions for almost free to do the same thing (e.g. Square Cash, which goes up to $2500 if you verify some info). I'd say that the risk of accepting a pile of $100 bills is certainly not worth the 45 cents or so the ACH transaction could cost you.
I noticed while living in Germany (this was just before the euro was introduced) that Germans love to pay for things in cash.
I was in line at Media Markt waiting to buy something and was a bit surprised to see the person in front of me pay for a computer with cash. It cost 2200 DM (this would have converted to 1100 euros), and he gave the cashier two 1000 DM notes and a 200 DM note. I was surprised to see so much money in cash form, but the cashier acted like it was normal.
I was told that transactions of this sort were common in Germany. Someone I knew told me they had witnessed someone paying for a car with cash, and although this was more unusual, it was not unheard of.
When I cashed out my bank account, I ended up with a 1000 DM bill, with a nice picture of the Brothers Grimm on it. It was weird to have so much money in one bill. Deutschmark notes became larger as the demonination increased, so that 1000 DM bill was huge. It didn't fit in my wallet, that's for sure.
I wonder if Germans still love paying for high value items in cash. I could certainly see them using 500 euro bills for purchases.
I was in line at Media Markt waiting to buy something and was a bit surprised to see the person in front of me pay for a computer with cash. It cost 2200 DM (this would have converted to 1100 euros), and he gave the cashier two 1000 DM notes and a 200 DM note. I was surprised to see so much money in cash form, but the cashier acted like it was normal.
I was told that transactions of this sort were common in Germany. Someone I knew told me they had witnessed someone paying for a car with cash, and although this was more unusual, it was not unheard of.
When I cashed out my bank account, I ended up with a 1000 DM bill, with a nice picture of the Brothers Grimm on it. It was weird to have so much money in one bill. Deutschmark notes became larger as the demonination increased, so that 1000 DM bill was huge. It didn't fit in my wallet, that's for sure.
I wonder if Germans still love paying for high value items in cash. I could certainly see them using 500 euro bills for purchases.
In all honesty, I think the messed-up banking system in North America distorts people's expectations. How is it a thing that in order to buy a laptop online, I am limited to:
* credit cards, which are only available from for-profit companies that can and will deny a subset of citizens with bad or non-existent credit rating (which itself is provided by other for-profit companies with intransparent, unaccountable data collection & evaluation practices) and charge substantial fees to the vendor
* or, if I'm lucky, wire transfer or cheques - the former being a blatant rip-off with unreasonably high fees, the latter a physical piece of paper that I have to send by snail mail, neither of them instantaneous, both with bank delays.
I think it's quite reasonable to expect from companies at least one payment method that's available to anyone, under any financial circumstances, with no or only marginal cost to the buyer and near-instantaneous transaction time.
In Europe, this has so far been cash for physical retailers. Websites often allow direct bank account transfers, which are possible because free, standardized, non-paper-based direct transfers from one bank account to another bank account are a thing - as opposed to North America where you have certified cheques, void cheques, email transfers, wire transfers, PayPal, Western Union, etc. These are all half measures in one way or another, covering up the lack of a universally available & universally accepted payment system.
I'll be the first one to appreciate a move away from cash, but let's make sure people have a viable alternative, yes?
To be fair, there are things like Visa/Mastercard debit cards which lighten the load a bit. They're still a middleman solution however, relying on contracts with individual payment providers and taking a substantial cut from the vendor on top of what a standardized, direct inter-bank network should be able to do. Cash (as well as SEPA, if short waiting periods are okay) doesn't suffer from that.
* credit cards, which are only available from for-profit companies that can and will deny a subset of citizens with bad or non-existent credit rating (which itself is provided by other for-profit companies with intransparent, unaccountable data collection & evaluation practices) and charge substantial fees to the vendor
* or, if I'm lucky, wire transfer or cheques - the former being a blatant rip-off with unreasonably high fees, the latter a physical piece of paper that I have to send by snail mail, neither of them instantaneous, both with bank delays.
I think it's quite reasonable to expect from companies at least one payment method that's available to anyone, under any financial circumstances, with no or only marginal cost to the buyer and near-instantaneous transaction time.
In Europe, this has so far been cash for physical retailers. Websites often allow direct bank account transfers, which are possible because free, standardized, non-paper-based direct transfers from one bank account to another bank account are a thing - as opposed to North America where you have certified cheques, void cheques, email transfers, wire transfers, PayPal, Western Union, etc. These are all half measures in one way or another, covering up the lack of a universally available & universally accepted payment system.
I'll be the first one to appreciate a move away from cash, but let's make sure people have a viable alternative, yes?
To be fair, there are things like Visa/Mastercard debit cards which lighten the load a bit. They're still a middleman solution however, relying on contracts with individual payment providers and taking a substantial cut from the vendor on top of what a standardized, direct inter-bank network should be able to do. Cash (as well as SEPA, if short waiting periods are okay) doesn't suffer from that.
The €500 note is quite big as well (would not fit easily in a wallet), here's a comparison: http://i.dailymail.co.uk/i/pix/2010/01/27/article-1246519-08...
«Swiss 1,000-franc note here to stay, says national bank. Switzerland vows to keep world’s most valuable single-denomination note despite ECB moves to pull its €500 note to help fight crime and terrorism.»
https://www.theguardian.com/business/2016/feb/16/1000-swiss-...
Fr. 1000 is around $1000. I got my car in exchange for fifteen of these purple beauties five years ago.
https://www.theguardian.com/business/2016/feb/16/1000-swiss-...
Fr. 1000 is around $1000. I got my car in exchange for fifteen of these purple beauties five years ago.
From Wikipedia:
> The Serious Organised Crime Agency claimed that "90% of all €500 notes sold in the UK are in the hands of organised
crime", revealed during an eight-month analysis. Seems like the mere existence of the 500 euro notes and those stupid enough to use them presents a pretty good profiling opportunity.
> The Serious Organised Crime Agency claimed that "90% of all €500 notes sold in the UK are in the hands of organised
crime", revealed during an eight-month analysis. Seems like the mere existence of the 500 euro notes and those stupid enough to use them presents a pretty good profiling opportunity.
> Seems like the mere existence of the 500 euro notes and those stupid enough to use them presents a pretty good profiling opportunity.
But...it doesn't. 90% of those sold being in the hands of organized crime doesn't mean 90% of times a 500 euro note is used it is used by organized crime. If most of it is used to store reserves of organized crime, it might make up a very small fraction of all exchanges of the notes (and even smaller if you exclude exchanges between organized crime participants.)
So, it might not be very a good profiling opportunity.
But...it doesn't. 90% of those sold being in the hands of organized crime doesn't mean 90% of times a 500 euro note is used it is used by organized crime. If most of it is used to store reserves of organized crime, it might make up a very small fraction of all exchanges of the notes (and even smaller if you exclude exchanges between organized crime participants.)
So, it might not be very a good profiling opportunity.
Someone is stupid because they use a certain banknote?
The ECB is most probably one of the biggest threats to freedom that we currently face.
I wouldn't go that far, but removing large notes is definitely a worrying sign of further ratchets in negative interest rate policy.
May I ask why?
Senior ECB officials said at the time [in 2016] that they needed more evidence that the notes facilitated criminal activity.
So did they find the evidence or not? The article omits this information.
So did they find the evidence or not? The article omits this information.
I get that large bills provide more opportunities for conterfeiters, money launderers, and other (in the eyes of the State) bad actors, I am surprised to see how low the line is being drawn. In the US they only go up to $100.[0]
The worrying thing is simply that it's in the State's interest to have every monetary transaction be electronic and thus entirely traceable, also in aggregate; whereas it's in my interest to be able to spend (or loan, or give away) my money privately.
The lower the available currency denominations, the more this balance shifts towards the State.
[0]https://www.treasury.gov/resource-center/faqs/Currency/Pages...
The worrying thing is simply that it's in the State's interest to have every monetary transaction be electronic and thus entirely traceable, also in aggregate; whereas it's in my interest to be able to spend (or loan, or give away) my money privately.
The lower the available currency denominations, the more this balance shifts towards the State.
[0]https://www.treasury.gov/resource-center/faqs/Currency/Pages...
You should be worried less about traceability, and more about negative interest rates turning you into an economic slave in the pursuit of unattainable growth.
A lot easier to chip away at your savings if they're bits in the bank versus notes under the mattress.
A lot easier to chip away at your savings if they're bits in the bank versus notes under the mattress.
A lot easier to chip away at savings if they're under the mattress losing value rather than in a savings account earning above-inflation interest
Show me a savings account in a developed country earning above inflation interest.
https://www.fnbodirect.com has .95% for savings (they used to have 6%)
Inflation for March was .85%.
Inflation for March was .85%.
I think we're quibbling when the difference is .1 percent. Too much capital is chasing too few returns.
NetSpend (US) promotional rate is 5% annually. Capped at $5000, but that's certainly above inflation for that balance.
Various banks and credit unions (US) have promotional (capped) 2% rates. (Above inflation.) Ally bank (US, online) has a ~1% rate, which is sometimes above inflation (uncapped).
More info: https://www.nerdwallet.com/blog/banking/nerdwallets-top-high...
Various banks and credit unions (US) have promotional (capped) 2% rates. (Above inflation.) Ally bank (US, online) has a ~1% rate, which is sometimes above inflation (uncapped).
More info: https://www.nerdwallet.com/blog/banking/nerdwallets-top-high...
If you're capping it at a dollar amount, its a marketing promotion/cost, not a true market interest rate.
Ally and others linked at nerdwallet are not capped.
Right, but as I point out below, you're not getting ahead making 0.1% above inflation. You're barely tracking it if it increases (and with rents and healthcare costs spiking/not properly tracked in inflation, I'd say you're most assuredly not staying ahead of inflation).
Yeah, but you didn't ask to "get ahead." Just:
> Show me a savings account in a developed country earning above inflation interest.
Anyway, 0.1% above inflation still beats 0% cash-under-mattress (in inflationary environments).
> Show me a savings account in a developed country earning above inflation interest.
Anyway, 0.1% above inflation still beats 0% cash-under-mattress (in inflationary environments).
Dunno if Poland qualifies as developed country, but most banks here offer an account with 3-5% interest above inflation (or deflation, as we are currently experiencing since year and a half).
Goldman Sachs just started to offer 1.05% on savings: https://www.gsbank.com
US inflation for last 12 months as of March 2016 was 0.9%.
US inflation for last 12 months as of March 2016 was 0.9%.
Here's my current account
http://www.santander.co.uk/uk/current-accounts/123-current-a...
Needless to say you can do a lot better with specialist products and better still with funky startup consumer investment platforms if you don't mind the risk
Needless to say you can do a lot better with specialist products and better still with funky startup consumer investment platforms if you don't mind the risk
> Monthly interest of 3% AER (variable) payable on your entire balance up to £20,000, when you have at least £3,000 in your account.
Capped.
Capped.
Sure. After that I have to use their actual savings products, which also pay over current inflation rates. (Or earn 5-12% on a lending product with actual risk associated with it).
Try sticking more than £20k in your mattress.
Livret A in France, 0.75% interest.
Negative interest rates will chip away at savings in a bank, in that case best to have cash
I don't know... I'm already pretty well chained to someone else's "pursuit of unattainable growth" in the long term, and I've seen too may currency fluctutions (and retirings!) to want to only own cash.
But I do think it's a reasonable concern that the same laws written to restrict financing of terrorism are equally useful to restrict financing of (say) democratic opposition parties.
But I do think it's a reasonable concern that the same laws written to restrict financing of terrorism are equally useful to restrict financing of (say) democratic opposition parties.
In the UK de facto we only go up to £20 (about $29)
The £50 note exists, but is seldom accepted because it's so rarely seen that the average person wouldn't be able to tell the difference between the genuine article and a parody £50 note, never mind a competently produced counterfeit. Pretty clear that British idiosyncrasy is driven by individuals not wanting to deal with large denomination bills rather than state malfeasance though.
The £50 note exists, but is seldom accepted because it's so rarely seen that the average person wouldn't be able to tell the difference between the genuine article and a parody £50 note, never mind a competently produced counterfeit. Pretty clear that British idiosyncrasy is driven by individuals not wanting to deal with large denomination bills rather than state malfeasance though.
I doubt it. The EUR 500 bill would raise more eyebrows. I 've never seen one. Banks will never give you one (not even E 200 bills).
Yes, the 500€ I can understand
Eliminating the 50£ and $100 is just a sad joke
Eliminating the 50£ and $100 is just a sad joke
Supposedly they were nicknamed 'Bin Ladens' in some places, due to the association with money laundering. I have no idea how true that is.
Something we do actually know, though, is that Osama himself had two of them sewn into his clothing at the time of his death.
The €500 note was one of the world's most valuable banknotes. There's no denomination anywhere near it for, say, dollars or pounds or whatever.
Something we do actually know, though, is that Osama himself had two of them sewn into his clothing at the time of his death.
The €500 note was one of the world's most valuable banknotes. There's no denomination anywhere near it for, say, dollars or pounds or whatever.
As far as I know, the "Bin Laden" nickname was because "everyone knew that they (he) existed, but nobody knew where they (he) was (were) / nobody had sen them (him)".
Now let's see if the 1000 CHF note is still here to stay (https://www.theguardian.com/business/2016/feb/16/1000-swiss-...). I assume that the 1000 CHF note is only sort of useful, because you can't launder it nearly as easily. With a 500 Euro note, you can spread them around and deposit them in many countries. With a pile of 1000 CHF notes, someone is going to notice.
Surprised it took them so long to get rid of them.
From an article[0] I found from when the UK decided to stop dealing with 500s
"many British gangsters stored their spoils in the form of €500 notes. While £1m weighs 50kg in £20 notes, the same value weighs only 2.2kg in €500 notes. This has made life easier for a growing number of criminals, since the euro's introduction in 2002. Should you wish, for example, you can swallow €150,000 in €500 notes, or hide €20,000 of them a cigarette packet"
[0]http://www.independent.co.uk/news/uk/crime/goodbye-to-the-no...
From an article[0] I found from when the UK decided to stop dealing with 500s
"many British gangsters stored their spoils in the form of €500 notes. While £1m weighs 50kg in £20 notes, the same value weighs only 2.2kg in €500 notes. This has made life easier for a growing number of criminals, since the euro's introduction in 2002. Should you wish, for example, you can swallow €150,000 in €500 notes, or hide €20,000 of them a cigarette packet"
[0]http://www.independent.co.uk/news/uk/crime/goodbye-to-the-no...
In Canada, when I needed over a $1,000 to pay my dentist I happily carried a $1,000 note.
Of course, I had to order it from my bank and wait until the next time they had money being shipped in. It's a happy memory that I can never repeat, because the $1,000 bills are no longer made here: (or in the U.S.)Although we haven't declared war on drugs we do have concerns about crime.
Of course, I had to order it from my bank and wait until the next time they had money being shipped in. It's a happy memory that I can never repeat, because the $1,000 bills are no longer made here: (or in the U.S.)Although we haven't declared war on drugs we do have concerns about crime.
But £50? ATMs tend to give me a bunch of 50€ notes and I like them. Everybody likes them. They’re not too large that you can still buy gum with one and not too small that your wallet is all cluttered up. I understand that £50 is slightly more, but not that much more to go down to £20/20€ for it.