Europe to abolish the €500 note over money laundering fears

500 euro notes
The notes will be phased out in 2018 Credit: Reuters

The European Central Bank has said it will no longer produce €500 bank notes over fears that the bills are being used by criminals as a convenient way to launder money and even finance terrorism.

The ECB "has decided to permanently stop producing the €500 banknote and to exclude it from the Europa series, taking into account concerns that this banknote could facilitate illicit activities," said the bank in a statement following a meeting of its governing council.

The bank would stop issuing the banknotes around the end of 2018, but that those currently in circulation will remain legal tender. The ECB and national banks "will take steps to ensure that the remaining denominations are available in sufficient quantities", it added.

Existing bills can also be exchanged at national central banks of eurozone nations for an unlimited period of time, added the ECB.

According to ECB statistics, the €500 note accounts for just 3pc of the total number of banknotes in circulation, but 28pc of the total value.

A million euros in €500 notes weighs 2.2 kilograms, or just under 5 pounds, and fits in a laptop bag.

euro notes
The €500 note makes up just 3pc of the euro banknotes in circulation  Credit: Reuters

Research earlier this year claimed that scrapping the purple notes could knock the euro’s value against more liquid currencies like the US dollar.

“Abolishing a note that represents almost 30pc of the total euros in circulation would be a negative for the currency,” said Athanasios Vamvakidis, a currency strategist at Bank of America Merrill Lynch.

Peter Sands, the former boss of Standard Chartered, is among those calling for the £50 to be abolished to discourage plumbers and builders from avoiding tax through cash-in-hand work.

 

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