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ECB to stop issuing 500 euro note

Thursday, May 05, 2016 - 01:16

The European Central Bank will stop issuing 500 euro ($575) banknotes towards the end of 2018 on concerns it could facilitate illicit activities. But, as Sonia Legg reports, there could be other motives behind the move.

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Mario Draghi had been fighting to keep it. But it seems the 500 euro note has fallen out of favour. The ECB will stop printing the notes in 2018 because of concerns they're often used for illegal activities. UK banks stopped handling them in 2010 - some suspect there may now be other motives behind the move. (SOUNDBITE) (English) BGC PARTNERS, MARKET STRATEGIST, MIKE INGRAM, SAYING: "One of the reasons might be to make sure that a higher proportion of cash is kept in the banking system and perhaps this is a prelude to the digitisation of cash - the abolition of physical cash - and of course maybe the introduction of negative interest rates on those cash balances." That's not all - the ECB may benefit in other ways too. (SOUNDBITE) (English) BGC PARTNERS, MARKET STRATEGIST, MIKE INGRAM, SAYING: "About 28 percent are in the form of 500 euro notes and it would presumably take some support away from the euro and divert that to the U.S. dollar and the Swiss franc - the Swiss still have a 1,000 Swiss franc note - and that acounts for 60 percent of the notes in circulation. So it could be an offhand way of undermining the euro and getting a weaker currency." For those with a stash under the mattress there's no need to worry though. The 500 euro note will remain legal tender indefinitely.

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ECB to stop issuing 500 euro note

Thursday, May 05, 2016 - 01:16