For the 500 euro bill – issue ends in a few days – supraregional economy



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Finishing the 500 euro bill: a first step to a world without money?

The other 17 national central banks of the Eurosystem had already closed the issue on 26 January 2019. The central banks of Germany and Austria accumulate the highest number of 500 euro banknotes in circulation. "That's why it's been decided that those who spend more than 500 euros get a little more time," Beermann recently told the Frankfurter Allgemeine Sonntagszeitung. "It's a great logistical effort to replace five hundred five-hundred-euro notes or other denominations."

At the beginning of May 2016, the Governing Council of the European Central Bank (ECB) decided that the production and issue of the 500 euro note would be halted "by the end of 2018". In the second revised series of common notes with enhanced security features, there will no longer be a € 500 note. This "Europe" series will be completed on May 28, 2019 with the issue of the new 100 and 200 euro notes.

With the waiver of EUR 500, proponents promise that terrorist financing and undeclared work will be postponed. If that works, it's controversial. The outstanding 500 remain legal tender and must be exchanged indefinitely.

The Bundesbank is skeptical about the upper limits for cash payments or the end for large banknotes. There is a lack of empirical evidence that measures such as the abolition of high denomination bills or the introduction of cash caps can effectively combat tax evasion and other criminal activities, "the central bank's March report said.

According to the calculation of the Bundesbank model, money is usually only used in an abusive way in the so-called parallel economy. According to the calculations, on average about 14% of the cash deposits in branches of the Bundesbank are "indirectly attributable to the parallel economy". However, the central bank also pointed to the difficulties of identifying exact figures.

According to estimates, the share of activities such as undeclared work, smuggling or drug trafficking in German gross domestic product (GDP) is between 2 and almost 17%. The assumptions are so far apart. "Even from these figures, it is clear that all the investigations of the parallel economy must be interpreted very carefully and there will be hardly any clear results," Beermann told FAS.

According to data from the European Central Bank (ECB), 540 million purple notes with a value of 269.9 billion euros were still pending in 2016. Since then, the number has fallen, but still many millions of 500 are circulating. In March 2019, there were around 509 million notes worth 254.6 billion euros.

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