ECB Decrees Slow Death of 500-Euro Note in Fight Against Crime

The European Central Bank will discontinue production of the 500-euro ($575) banknote in a move that risks tensions with euro-area citizens worried the institution is encroaching on their freedoms.

   Citing “concerns that this banknote could facilitate illicit activities,” the ECB said in a statement on Wednesday that it will stop producing the bill from the end of 2018. The note will remain legal tender and can be exchanged at any central bank in the euro area for an unlimited period.

   ECB President Mario Draghi has said previously that the use of high-denomination bills for criminal purposes is a reason to consider withdrawing them. The decision is still likely to attract criticism from people suspicious that the central bank, already under attack from savers for its ultra-low interest rates, is trying to abolish cash altogether.

   The defense of high-denomination notes has been led by Germany, the region’s biggest economy. Clemens Fuest, head of the Munich-based Ifo Institute, said in an interview with Bloomberg Television on Monday that there is “no justification” for removing the bill. Bundesbank President Jens Weidmann said in March the claim that crime will be curtailed by removing the 500-euro note hasn’t been proven, and the debate risks undermining trust in cash.

Πηγή: bloomberg.com