The ECB announced on Wednesday that it will print more cuts of 500 euros. But the existing stock will continue to live life and tickets will retain their value will remain guaranteed.
Seen from Paris, what is the common point between a German, a drug trafficker and a terrorist? Answer: The 500 euro note. This cut, accused of favoring the financing of crime and terrorism will no longer be issued. The ECB decided not to print at all new cuts of 500 euros from the end of 2018, when the new $ 100 and 200 euros have been put in circulation, said the ECB in a statement.
At the same time 594 million notes in circulation, which represent a total value of 297.2 billion euros, will not be “removed”. That will not be asked to come to their holders to return them to their national central banks to exchange: they can keep on forever, or at least leave them safely to their heirs. The cuts “purple” – virtually their only feature their size a little larger than the others in the range of tickets from 5 to 500 euros – will continue to have their guaranteed value by the ECB until the end of time <. / p>
the decision not to remove this cut could aim to treat the Germans. In fact, they love to pay in cash, because after the experience of two totalitarian regimes, Nazism until 1945, then the Stasi in the former GDR until 1989, they consider that this is the best way to let her privacy safe from Big Brother looks. As for cocaine traffickers and smugglers Daech suitcases, they are fond of high denomination euro notes to their anonymity and convenience: 10,000 euros in 500 notes held in an envelope of 8.2 to 16 centimeters and 2 millimeters thickness. But how to fight against the thugs without annoy the citizens of Munich? This equates to squaring the circle. The governors of the European Central Bank (ECB), in discussing for weeks, eventually favor this solution.
Reviews acerbic
Mario Draghi is personally committed to this solution that some deem a “rough and ready side.” As President of the ECB must indeed bear, almost since his appointment in November 2011, the sharp criticism of its Anglo-Saxon counterparts in international meetings. The latter accused him of playing dirty money and terrorism. The larger denominations as the Swiss National Bank and the ECB continue to emit are “absolutely disgraceful”, has been said recently Charles Goodhart, one of the former directors of the Bank of England, which expressed the feeling of his peers. Across the Channel the ticket 50 pounds (about 70 euros) is the largest existing name for the sterling. And the United States, the Federal Reserve Bank has removed all his cuts above 100 dollars in the 1970s
Since the terrorist attacks in Paris on 13 November 2015, critics have only intensify , reviving the debate within the ECB. Benedict Coeuré, one of its six directors, publicly acknowledged in mid-January, “the ECB was considering the fate to give 500 euro notes, given its use in the laundering of dirty money and organized crime”.
On a value 1071 billion represented the total circulation in euro 500 notes in themselves constitute 27.8% ( 297200000000)
remove them in proper form in full? Apart from the discontent that this would cause in Germany, it appeared that such a radical solution would be practically difficult to implement. Even by giving a relatively remote deadline, eg in 2020, it was fear of panic, or even no alternative if holders demanded a conversion of 100 or 200 euro note, unavailable in sufficient quantity, a -t we thought Frankfurt.
This is the movement of “bin Laden”, as they are known since the mid-2000s in Spain to designate tickets “which we always talk but that ‘we never see, “reached significant proportions. To a value of 1.071 trillion euros that represents all currency in circulation in euro 500 notes in themselves constitute 27.8% (297.2 billion). An economist at Bank of America Merrill Lynch, Athanasios Vamvakidis, even calculated in January 2016, their final withdrawal, and the postponement of the US dollar that would ensue – by far the most liquid currency in the world – could lead a significant decline in the euro on the markets vis-à-vis the dollar exchange.
Another argument that weighed in the balance in Frankfurt, a permanent removal could create a poisonous climate of widespread suspicion. We remember that in Greece, where the ticket hoarding – 4109 euros per capita on average – is the highest in Europe, banks were forced investors to identify themselves last summer when they wanted to convert their large cuts kept in their mattress (this was the only means of getting cash in Athens).
A species endangered
That’s why the 25 governors of the ECB are preparing on Wednesday to announce “the end of the issue of euro banknotes, but not their abolition. ” This interim solution is hold the fate that had been reserved for tickets Deutsche Mark in January 2002, during the transition to the euro. Contrary to what happened in France, where the conversion into euros of franc banknotes was only possible for a period of ten years – more than they lose all value – in Germany the Bundesbank will accept until the end of time to convert the euro Deutsche Mark notes that will be presented at its counters.
Even better, it should still be possible to pay for purchases with the “bin Laden”. But be careful, however, from the moment the tickets of 500 euros will be reported to the commercial banks, they will be conducted to put them in their national central bank, and therefore the ECB. These cuts will then be removed from the monetary system.
This is also what is observed now. The statistics for the first quarter 2016 the ECB show that it has removed more euro banknotes than it has issued new. The net balance was negative: the number of banknotes in circulation was 614 million units at the end of 2015 was only 594 million in March 2016. The “bin Laden” is already a kind endangered. A great victory against terrorism?
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