The Truth Behind the Disappearance of the 500 Euro Bill
As many may know, the 500 euro note will stop printing in 2018. However, it will not lose its value and always be changed.
Entering the topic
It is the highest-value euro banknote and has been used since the introduction of the euro in 2002. It is one of the highest value circulating banknotes in the world, worth around 558 USD, is several times greater than many of the largest circulating notes of other major currencies. The 500 euro note has always been controversial since the introduction of the euro in the market. Also, it is known as the bin-Laden, possibly because of its criminal implications, and is likely to be one of the main reasons why it is removed from circulation. But the five hundred euro note contains several complex security features that make counterfeiting very difficult. The Serious Organised Crime Agency claimed that "90% of all €500 notes sold in the UK are in the hands of organised crime".
Historically, some of the currencies the Euro replaced had widely used high-value notes. In particular, Spain had a quarter of all these high-value bills within its borders in 2006. This concentration of €500 notes is far greater than expected for an economy of Spain's size, as prior to Euro conversion the largest banknote was 10,000 Spanish peseta worth €60.
As of December 2015, there were approximately 613,559,542 €500 banknotes in circulation around the Eurozone, therefore, it is the second-least circulated banknote in the Eurozone.
Despite all this information about the possible criminal use of 500 euro notes, the main reason I am writing is another.
Why, suddenly, the ECB is so keen to withdraw this banknote when there have always been these problems?
Countries with euro
For those who did not know where the euro was used. Consists of 19 of the 28 member state of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
European Central Bank
European Central Bank
The European Central Bank (ECB) is the central bank for the euro and administers the monetary policy of the Eurozone.
The primary objective of the European Central Bank is to maintain price stability. Some of the main tasks, are to define and implement the monetary policy for the Eurozone or to conduct foreign exchange operations, to take care of the foreign reserves. It could be summarized that the European Central Bank has a monopoly on currency, controlled by Mario Draghi (President of the European Central Bank since 1 November 2011, https://en.wikipedia.org/wiki/Mario_Draghi).
Unemployment by government
Long term interest
Percentage debt of the GDP
Survival measures against the crisis
As you can see in the images above, many of the countries of the European Union follow in the great recession went in 2008. Due to the crisis, governments began their policies to try to alleviate the heavy debt in all sectors of its economy. Many of the EU economies remained strong despite the global crisis, a great example would be Germany. The other states with a huge financial crisis, tried to cut spending and raise more through tax increases, without any of their actions came to light of the population. Citizens just want to escape the arbitrary mandates of the powerful aristocracy, let people regulate their money as they want. The European Central Bank was not looking as an economy without intervening would do. It also began its measures against the crisis. These are some of the measures that the European Central Bank took to try to revive European economies:
ECB after the crisis
Lowering interest rates
Currently at minimum, the ECB tried to credit easier to attain to the people, but this measure has not been noticed in the real economy.
Negative deposit rates
Measure affecting banks, as they now have to pay for storing money, and thus try to get the money into circulation.
Direct bank bailouts to banks, so they can operate and offer credit.
Purchase credit packages
Now, the ECB buys covered bonds and ABS, purchases existing credit to accelerate the granting of credit.
Bailout economies.In many of them, ECB did not need to do this, just to saying investors remained calm.
Following the Federal Reserve and the Bank of Japan, investment in financial assets such as government bonds or government debt with new money printed.
ECB in 3 min
ECB interest rate
500 in this matter
As we have seen, the banks have to pay to save people money. However, banks can not do the same with their customers, as no one would want to keep money in the bank if they lose out. Nevertheless, gradually this benefit offered by banks will disappear. As you can no longer keep money in banks, and people do not want to risk their money in the stock market or other markets, it was necessary to seek other remedies to save money. 500 euro notes were a great escape for people who did not want to keep money in the banking system, they were a way of independence against the bank. The ECB only wants us to continue consuming to fix the economy but does not know that the only thing it does is make everything worse. It could move away from the economy and not act as a monopoly on the currency and allow the market to regulate itself.
500 euro art drawing
Some news about this topic
- Europe to Remove 500-Euro Bill, the ‘Bin Laden’ Bank Note Criminals Love
- ECB to stop issuing 500 euro note but keep it legal tender
The central bank plans to stop issuing these banknotes towards the end of 2018, concerned it could facilitate illicit activities.
- ECB Deep Freeze on 500-Euro Note Risks German Cold Shoulder - Bloomberg
When European Central Bank policy makers discuss the fate of the 500-euro note this week, they may want to consider the case of Fabio Rizzi.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.