Euros , Dollars "Narco-Currency" Warfare ?

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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Wed Feb 03, 2016 6:02 am

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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Mon Feb 08, 2016 9:02 am

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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby Freitag » Mon Feb 08, 2016 6:17 pm

Ah, the coming War on Cash. I can't wait for a cashless Utopia full of bail-ins and direct taxation. Cash is for criminals! What's in your wallet?
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby Luther Blissett » Mon Feb 08, 2016 6:42 pm

Freitag » Mon Feb 08, 2016 5:17 pm wrote:Ah, the coming War on Cash. I can't wait for a cashless Utopia full of bail-ins and direct taxation. Cash is for criminals! What's in your wallet?


Yeah, I'd love to see a source on the "90% of all €500 notes in circulation are used in crimes" stat. Part of me believes it, but a huge part of me feels that this threshold for definition of "crime" might be low.
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Tue Feb 16, 2016 11:26 am

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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby identity » Tue Feb 16, 2016 7:22 pm

from the Guardian:
Crime, terrorism and tax evasion: why banks are waging war on cash

I can remember the moment I realised the era of cash could soon be over.

It was Australia Day on Bondi Beach in 2014. In a busy liquor store, a man wearing only swimming shorts, carrying only a mobile phone and a plastic card, was delaying other people’s transactions while he moved 50 Australian dollars into his current account on his phone so that he could buy beer. The 30-odd youngsters in the queue behind him barely murmured; they’d all been in the same predicament. I doubt there was a banknote or coin between them.

The possibility of a cashless society has come at us with a rush: contactless payment is so new that the little ping the machine makes can still feel magical. But in some shops, especially those that cater for the young, a customer reaching for a banknote already produces an automatic frown.

Among central bankers, that frown has become a scowl. There is a “war on cash” in the offing – but it has nothing to do with boosting our ease of payment or saving trees.

Consider the central banks’ anti-crisis measures so far. The first was to slash interest rates close to zero. Then, since you can’t slash them below zero, the banks turned to printing money to stimulate demand. But with global growth depressed, and a massive overhanging debt, quantitative easing (QE) is running out of steam.

Enter the era of negative interest rates: thanks to the effect of QE, tens of billions held in government bonds already yield interest rates that are effectively below zero. Now, central banks such as Japan and Sweden have begun to impose negative official interest rates.

The effect, for banks or long-term savers, is that by putting your money in a safe place – such as the central bank or a government bond – you automatically lose some of it.

Not surprisingly, these measures have led to the growing popularity of cash for people with any substantial savings. Bank of England research shows demand for cash has grown faster than GDP in many countries. So the central banks face a further challenge: how to impose negative interest rates on cash itself.

Technologically, you can’t. If people hold their savings as physical currency, it keeps its value – and in a period of deflation the spending power of hoarded cash increases, even as share prices and the value of bank deposits fall. Cash, in a situation like this, is king.

But the banks are ahead of us. Last September, the Bank of England’s chief economist, Andy Haldane, openly pondered ways of imposing negative interest rates on cash – ie shrinking its value automatically. You could invalidate random banknotes, using their serial numbers. There are £63bn worth of notes in circulation in the UK: if you wanted to lop 1% off that, you could simply cancel half of all fivers without warning. A second solution would be to establish an exchange rate between paper money and the digital money in our bank accounts. A fiver deposited at the bank might buy you a £4.95 credit in your account.

More radical still would be to outlaw cash. In Norway, two major banks no longer issue cash from branch offices. Last month, the biggest bank, DNB, publicly called for the government to outlaw cash.

Why would a central bank want to eliminate cash? For the same reason as you want to flatten interest rates to zero: to force people to spend or invest their money in the risky activities that revive growth, rather than hoarding it in the safest place.

Calls for the eradication of cash have been bolstered by evidence that high-value notes play a major role in crime, terrorism and tax evasion.

In a study for the Harvard Business School last week, former bank boss Peter Sands called for global elimination of the high-value note. Britain’s “monkey” – the £50 – is low-value compared with its foreign-currency equivalents, and constitutes a small proportion of the cash in circulation. By contrast, Japan’s 10,000-yen note (worth roughly £60) makes up a startling 92% of all cash in circulation; the Swiss 1,000-franc note (worth around £700) likewise. Sands wants an end to these notes plus the $100 bill, and the €500 note – known in underworld circles as the “Bin Laden”.

The advantages of a digital-only payment system to the user are clear: you can emerge from the surf in only your bathing shorts and proceed to buy beer, food, or even a small car, providing your balance is positive. The advantages to banks are also clear. Not only can all transactions be charged a fee, but bank runs are eliminated. There can be no repeat of the queues outside Northern Rock, nor of the Greek fiasco last summer, because there will be no ATMs, only a computer spreadsheet moving digital money around. The advantages to governments are also clear: all transactions can be taxed. Capital controls are implicit within the system.

But there are drawbacks, even for governments that would like to take absolute control of money transactions. First, resilience. If a cyber-attack or computer malfunction took down a digital-only payment system, there would be no cash reserves in households and businesses to fall back on. The second is more fundamental and concerns freedom. In most countries, the ability to take your cash out of the bank and to spend it anonymously is associated with many pleasurable activities – not all of which are illegal but which exist on the margins of society. How tens of thousands of club-goers would pay for their drugs each Saturday night is a non-trivial issue.

Nevertheless, the arrival of negative interest rates for banks, together with new rules allowing governments to bail-in – ie confiscate – deposits above a protected minimum, are certain to increase savers’ awareness of the value of cash, and will prompt calls in earnest for its abolition.

If it happens, it would be the ultimate demonstration of the power of finance over people. As for resistance? Go ahead and try. It may be the Queen’s head on a £50 note but the “promise to pay” is made above the signature of a Bank of England bureaucrat.
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Wed Feb 17, 2016 7:08 am

..interesting article...wonder what the next stage is after this....?

although bank notes basically originated as entirely private notes issued by private banks backed by their own credit and before that by the goldsmiths backed by their gold stock......if the national cental banks create unmet demand for a paper bearer currency then the market may provide a solution - google-money or something - which they will then have to legislate to close down aswell....
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Wed Feb 17, 2016 3:30 pm

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Harvard's Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation.

I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill. But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

The fact that — as Sands points out — in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.

What should happen next? I’d guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place. In terms of unilateral steps, the most important actor by far is the European Union. The €500 is almost six times as valuable as the $100. Some actors in Europe, notably the European Commission, have shown sympathy for the idea and European Central Bank chief Mario Draghi has shown interest as well. If Europe moved, pressure could likely be brought on others, notably Switzerland.

I confess to not being surprised that resistance within the ECB is coming out of Luxembourg, with its long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy and where 20 times as much cash is printed, relative to gross domestic, compared to other European countries.

These are difficult times in Europe with the refugee crisis, economic weakness, security issues and the rise of populist movements. There are real limits on what it can do to address global problems. But here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch.

Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100. Such an agreement would be as significant as anything else the G7 or G20 has done in years. China, which is hosting the next G-20 in September, has made attacking corruption a central part of its economic and political strategy. More generally, at a time when such a demonstration is very much needed, a global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.

https://www.washingtonpost.com/news/wonk/wp/2016/02/16/its-time-to-kill-the-100-bill/
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby identity » Wed Feb 17, 2016 7:11 pm

First they came for the $100 bill, and I did not speak out...
We should never forget Galileo being put before the Inquisition.
It would be even worse if we allowed scientific orthodoxy to become the Inquisition.

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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby MinM » Wed Feb 17, 2016 11:46 pm


ImageThe Detroit News ‏@detroitnews 9 minutes ago

Funny money: Customs seizes $4.65M in fake $100 bills at @DTWeetin http://detne.ws/1XxFJyc
Image

A Vietnamese couple’s inability to keep its story straight resulted in U.S. Customs and Border Protection agents seizing $4.65 million in funny money from the travelers at Detroit Metro Airport on Friday, the agency said in a release Wednesday.

“The couple attempted to import the counterfeit U.S. $100 bills and Vietnamese Dong into the United States to be offered as burnt-offerings to the deceased, as often practiced in certain Asian cultures,” the release explained.

Customs encountered the couple on Friday when they arrived at Metro Airport from South Korea. When the couple made conflicting statements about how much money they were carrying in excess of $10,000, their luggage was examined.

“A secondary search of their luggage resulted in the discovery of 93 bundles of counterfeit U.S. $100 bills and 32 bundles of counterfeit Vietnamese Dong,” the statement said.

It was not immediately known how much money the counterfeit Dong came out to, said Customs spokesman Ken Hammond.

The U.S. Secret Service, which is sworn to fight the counterfeiting of American currency — in addition to the job it is best known for, protecting the president of the United States — has custody of the funny money.

“Hell money,” as it is called, is meant to resemble legal tender, and is common in the Vietnamese culture, Hammond said.

The Vietnamese couple never tried to spend the money, and was allowed to continue on their travels, Hammond said. That said, Customs did note that “the manufacturing of, and/or importation of counterfeit Federal Reserve notes could result in federal charges.”

http://www.detroitnews.com/story/news/l ... /80497074/
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby Joe Hillshoist » Thu Feb 18, 2016 2:27 am

Kill Bill - where is Hugh?

(runs and hides)
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Thu Feb 18, 2016 5:55 am

...probably North Korean forgeries... :whisper:



New $100 bill: why North Korea won't be very happy

New $100 bill is aimed at staying ahead of counterfeiters. First and foremost, impoverished North Korea.

by Mike Eckel, Correspondent OCTOBER 8, 2013


http://www.csmonitor.com/World/2013/1008/New-100-bill-why-North-Korea-won-t-be-very-happy-video
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Mon Feb 22, 2016 1:44 pm

How 'black money' saved the Indian economy

Justin Rowlatt South Asia correspondent 22 February 2016

http://www.bbc.co.uk/news/world-asia-india-35610332

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Kaushik Basu, the chief economist of the World Bank and former chief economic adviser to the Indian government, says the nation's tradition of petty corruption helped India avoid the worst of the banking crisis that has crippled most other large economies in the last few years.

It is an extraordinary claim for such an influential figure to make but, as he says in his new book, An Economist in the Real World, "economics is not a moral subject".
His argument is that the pervasive use of "black money" - illegal cash, hidden from the tax authorities - created a bulwark against a crisis in the banking sector.

Let me explain.

Back in the last years of the noughties India's economy was looking just as frothy as the rest of the world. It had been growing at an astounding 9% a year for the three years to 2008. What's more, India's growth had been fuelled, at least in part, by a dramatic housing boom.

Between 2002 and 2006 average property prices increased by 16% a year, way ahead of average incomes, and faster even than in the US. The difference in India is that all this "irrational exuberance" did not end in disaster.

Dirty money
There was no subprime loans crisis to precipitate a wider crisis throughout the banking sector. So the big question is why not. There were some shrewd precautionary moves by India's central bank, concedes Mr Basu, but he says one important answer is all that dirty money. In most of the world the price you pay for a property is pretty much the price listed in the window of the local realtor or estate agent. Not in India.

Here a significant part of almost all house purchases are made in cash. And because the highest denomination note in India is 1,000 rupees, ($15; £10) it isn't unusual for a buyer to turn up with - literally - a suitcase full of used notes. This is how it works.

Let's say you like the look of a house that is for sale. You judge it is worth - for argument's sake - 100 rupees. The chances are the seller will tell you he will only take, say, 50 rupees as a formal payment and demand the rest in cash. That cash payment is what Indians refer to as "black money".

It means the seller can avoid a hefty capital gains tax bill. Buyers benefit too because the lower the declared value of the property, the lower the property tax they will be obliged to pay.

What it also means is that Indians tend to have much smaller mortgages compared to the real value of their properties than elsewhere in the world. At the peak of the property boom in the US and the UK it was common for lenders to offer mortgages worth 100% of the value of the property. Some would even offer 110% mortgages, allowing buyers to roll in the cost of finance and furnishing their new home. That's why when the crash came, the balance sheets of the big banks collapsed along with property prices.

In India, by contrast, mortgage loans can only be raised on the formal house price. So, says Mr Basu, a house worth 100 rupees would typically be bought with a mortgage of 50 rupees or less. So when prices fell in India - and they did fall in 2008 and 2009 - most bank loans were still comfortably within the value of the property. That's why India managed to avoid the subprime crisis that did so much damage elsewhere.

Legalising bribery
India did experience a slowdown, but it was collateral damage from the global recession rather than the result of any national problem. Indeed, within a year India had begun to pull out of the crisis, returning to growth of almost 8% a year between 2009 and 2011.

Image
Mr Basu says only those who take bribes should be held criminally responsible

That is not to say that Mr Basu approves of petty corruption. He compares it to the effect of an unpleasant disease: it may have some positive side effects - encouraging your hair to grow, for example - but you would still prefer not to have the illness.

Indeed, Mr Basu is famous for having devised a particularly clever and characteristically radical way of rooting out corruption - legalising bribery. A few years ago, he proposed that instead of both bribe-givers and bribe-takers being held criminally responsible for their actions, only the bribe-taker should face sanctions.
It is a simple change, but radically alters the relationship between the two parties.

It means people who give bribes no longer have a shared interest in keeping their nefarious activity secret. Freed from the risk of prosecution, bribe-givers would have a powerful incentive to reveal corruption. Unfortunately, says Mr Basu, his innovation has still not found its way into mainstream Indian law.
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Mon Mar 21, 2016 9:06 am

“Negative” Interest Rates and the War on Cash

Posted on Februar 9 by rawjapan

https://professorwerner.wordpress.com/2016/02/09/negative-interest-rates-and-the-war-on-cash/

The talking heads featured on the corporate mainstream media have started to disseminate the idea that cash is a barbarous relic and needs to be abolished. Central bankers have been particularly articulate, such as former IMF staffers Kenneth Rogoff and Peter Bofinger, or current Bank of England spokesman Andrew Haldane.

Among the reasons why cash suddenly needs to be abolished are the usual arguments, such as that criminals may be using cash, or that electronic money is more ‘efficient’. Some media even claim that people are annoyed in queues when someone pays with the more cumbersome cash, instead of the faster plastic money. The truth is of course the opposite, although the recent introduction of contactless debit cards in the UK, which only need to be waived at the card terminal for payment, have speeded up the payment of petty transactions compared to the usually much longer processing time for debit cards compared to cash.

Another reason given in favour of abolishing cash is the argument that this will facilitate bank bail-ins, as agreed at the Seoul G20 summit in 2010: if people can move money out of the banks into cash, it is not possible to steal their money to bail out the banks. While cynics will be open to this argument, the reality is that it does not make sense: in Cyprus, where the Seoul G20 programme was first implemented, banks were shut before deposits were confiscated. In Greece, banks were shut for a month and people had to survive on cash, which they were after a while allowed to withdraw in small amounts only. What would have happened if cash had already been abolished is that the ECB shutting down Greek banks would have been more effective in blackmailing the Greek people to give in to Troika demands.

The main reason advanced by the Bank of England for wanting to abolish cash is that it wishes to stimulate the UK economy, and to do so it wants to use interest rates. Since rates are already zero, it is now only reasonable to lower them into negative territory. However, to make such a policy effective, the possibility to move from electronic money into cash needs to be taken away. If cash is abolished, we can then enjoy the benefits of negative interest rates – or so the official narrative goes.

This story is so full of holes that it is hard to know where to start. Let’s begin by reminding ourselves that it has been the Bank of England that has since 2009 argued that interest rate policy is not a good tool to stimulate the economy, and instead it wanted to use what it (misleadingly) called ‘Quantitative Easing’. So if that is true, why now suddenly switch back from the quantity to the price of money? What is it that should make ‘price easing’ now more effective than an emphasis on quantities? Wouldn’t it be better to instead introduce true quantitative easing, which expands purchasing power in the productive economy, such as in the hands of SMEs?

Secondly, let us consider the proposal of introducing negative interest rates in an effort to stimulate the economy. As we know, the proclaimed transmission mechanism of lower rates is via cheaper borrowing costs. In countries where a negative interest rate policy has been introduced, such as Denmark or Switzerland, the empirical finding is that it is not effective in stimulating the economy. Quite the opposite.

This is because negative rates are imposed by the central bank on the banks – not the borrowing public (so please forget the idea that you will be given a mortgage, and paid an extra fee on top to do so). To be precise, they are imposed on the reserves held by banks at the central bank.

This might seem reasonable at first sight: Have not these mean banks been hoarding all the QE cash from the central bank, instead of lending it out?

No. It is a little known fact that the total quantity of reserves held by banks at the central bank is entirely determined by the central bank. Individual banks can try to reduce their reserves, but only at the expense of other banks holding more reserves. This is of course why the type of “QE” implemented by many central banks – buying financial assets and increasing banks’ reserves at the central bank – have only created another asset bubble, but hardly helped the real economy. Banks cannot lend out their reserves at the central bank. As we show in the book “Where does Money come from?”, banks’ reserves at the central bank are simply credits created by the central bank for the benefit of the banks – central bank money that cannot circulate in the economy.

As a result, negative interest rates on banks’ reserves at the central bank are simply a tax imposed on banks. So why would central banks impose new taxes on banks at this stage? The experience of Switzerland may provide answers: negative rates raise banks’ costs of doing business. The banks respond by passing on this cost to their customers. Due to the already zero deposit rates, this means banks will raise their lending rates. As they did in Switzerland. In other words, reducing interest rates into negative territory will raise borrowing costs!

If this is the result, why do central banks not simply raise interest rates? This would achieve the same result, one might think. However, there is a crucial difference: raised rates will allow banks to widen their interest margin and make their business more profitable. With negative rates, banks’ margins will stay low and the financial situation of the banks will stay precarious and indeed become ever more precarious.

As readers know, we have been arguing that the ECB has been waging war on the ‘good’ banks in the eurozone, the several thousand small community banks, mainly in Germany, which are operated not for profit, but for co-operative members or the public good (such as the Sparkassen public savings banks or the Volksbank people’s banks). The ECB and the EU have significantly increased regulatory reporting burdens, thus personnel costs, so that many community banks are forced to merge, while having to close down many branches. This has been coupled with the ECB’s policy of flattening the yield curve (lowering short rates and also pushing down long rates via so-called ‘quantitative easing’). As a result banks that mainly engage in traditional banking, i.e. lending to firms for investment, have come under major pressure, while this type of ‘QE’ has produced profits for those large financial institutions engaged mainly in financial speculation and its funding.

The policy of negative interest rates is thus consistent with the agenda to drive small banks out of business and consolidate banking sectors in industrialised countries, increasing concentration and control in the banking sector.

It also serves to provide a (false) further justification for abolishing cash. And this fits into the Bank of England’s surprising recent discovery that the money supply is created by banks through their action of granting loans: by supporting monetary reformers, the Bank of England may further increase its own power and accelerate the drive to concentrate the banking system if bank credit creation was abolished and there was only one true bank left – the Bank of England. This would not only get us back to the old monopoly situation imposed in 1694 when the Bank of England was founded as a for-profit enterprise by private profiteers. It would also further the project to increase control over and monitoring of the population: with both cash and bank credit alternatives abolished, all transactions, money creation and allocation would be implemented by the Bank of England.

With all money being electronic money, one can already predict the questions ‘raised’ by the PR departments of central banks and keenly picked up by the mainstream media: How could one increase the security and safety of this digital money. What if one loses one’s direct debit card? No doubt, some bright Bank of England spark, or else any of the talking heads in the media, will then suggest we should adopt the techniques long practiced with our pets, namely of implanting microchips under the skin as our money of the future. Whether this spells progress readers needs to decide for themselves.

First published in the October 2015 Liquidity Watch report by Prof. Richard A. Werner
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Re: Euros , Dollars "Narco-Currency" Warfare ?

Postby semper occultus » Wed May 04, 2016 3:49 am

Image

The European Central Bank is set to decide on Wednesday the fate of the €500 banknote, which many people associate with money laundering, the black market and terrorist financing.

The violet-coloured bill, the largest denomination banknote in the single currency area and physically also the bigger than the five other euro bills, is on the agenda of a meeting of the ECB’s governing council.

Notwithstanding any surprises, the council is likely to vote to stop issuing them, as the bill is believed to be favoured by criminals for moving large sums of money around without the authorities knowing. But its possible abolition is raising hackles in countries such as Germany.

“Such notes are the preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved,” according to a recent Harvard University study.

Because of its size and portability, the €500 note has become so prized in underground finance that it can trade at more than its face value, and has become known in some circles as a “Bin Laden”, the study said.

The €500 note is “used more for hiding things than buying them,” said French finance minister Michel Sapin in March.

“It is used more to facilitate transactions which are not honest than to allow you and me to buy food to eat,” Sapin said.

France is pushing to step up the fight against terrorist financing in the aftermath of the bloody series of attacks in Paris in 2015.

The European commission had said in February that it would “explore the need for appropriate restrictions on cash payments exceeding certain thresholds and to engage with the European Central Bank to consider appropriate measures regarding high denomination notes, in particular the EUR 500 note.”

According to ECB statistics, the €500 bills account for just 3% of the total number of banknotes in circulation, but 28% of the total value.

Nevertheless, resistance to its possible abolition appears to be particularly high in Germany, where most people still prefer to make payments in cash.

And when the euro was created, it was Germany that had been keen to have a €500 bill because it was of a similar size denomination as its 1,000 Deutschmark banknote.

Opponents of the note’s abolition are concerned that it would simply be the first step in abolishing cash altogether and be replaced by electronic payment systems that can be completely monitored by authorities.

A number of experts have suggested that doing away with the €500 note would not be particularly effective in fighting crime.

“Organised crime isn’t stupid. Most money is laundered without cash via bogus companies,” said Friedrich Schneider, an expert on the shadow economy at the University of Linz in Austria in interviews to a number of German media recently.


http://www.theguardian.com/business/2016/may/04/500-euro-banknote-could-be-scrapped-crime
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