THE 500 EURO ‘BIN LADEN’ BANKNOTE

The banknotes are called by many Europeans as ‘bin Ladens’ because they are rarely seen by ordinary people, as they are often the illicit currency of criminals.

The debate to discontinue the €500 ($655) note is being revisited, this time by Bank of America analyst and former International Monetary Fund employee Athanasios Vamvakidis, the Wall Street Journal reported.

In a research note released on Tuesday, Vamvakidis argues pulling the high denomination bill from circulation would lead to a slight depreciation in the euro, which would benefit local exports, and in turn, increase GDP. Above all, discontinuing the banknote would directly target organized crime.

Because many of the banknotes are tied up in contraband activity, this creates a ‘store of value’ according to Vamvakidis, and is the core problem with the €500 bill, as they end up as ‘mattress money’. This money doesn’t circulate through the economy in day to day transactions, and for this reason they should be done away with.

A European Central Bank study found only one-third of these notes are actually used for transactions the rest lay dormant.

The €500 notes were first printed in 2002, and since their introduction, only one-third are in circulation, according to a study by the ECB. Because of their high value, they are used for saving, not spending.

To read the complete article, see: Time to pull the plug on the ‘bin Laden’ 500 euro note – Bank of America (rt.com/business/banknotes-euro-criminals-bank-628/)

Wayne Homren, Editor

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