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| 500-euro note. Photo Credit: Leonhard Foeger/Reuters |
Frankfurt
(AFP) - The European Central Bank on Wednesday said it would stop
producing and issuing 500-euro banknotes, amid fears that the
violet-coloured bills were favoured by criminals for money laundering
and even terrorist financing. The
bank is to stop issuing the 500-euro bills ($580) around the end of
2018 although those currently in circulation will remain legal tender. Existing
bills can also be exchanged at national central banks of eurozone
nations for an unlimited period of time, added the ECB, announcing its
decision to scrap the denomination after "taking into account concerns
that this banknote could facilitate illicit activities". The
largest denomination banknote in the single currency area is one of the
world's most valuable bills, alongside the 1,000 Swiss franc ($1,045,
910 euros) note. It
is physically also the biggest than the five other euro banknotes and
believed to be favoured by criminals for moving large sums of money
around without the authorities' knowledge. "Such
notes are the preferred payment mechanism of those pursuing illicit
activities, given the anonymity and lack of transaction record they
offer, and the relative ease with which they can be transported and
moved," according to a recent Harvard University study. Because
of its size and portability, the 500-euro note has become so prized in
underground finance that it can trade at more than its face value, and
has become known in some circles as a "Bin Laden", the study said. A
million euros worth of 500-euro notes weigh just 2.2 kilograms (4.85
pounds) and pack easily into a laptop bag, while the same sum
transported in 50-euro denomination comes up to 22 kilos and requires
the usage of a large sports bag. According
to ECB statistics, the 500-euro bills account for just three percent of
the total number of banknotes in circulation, but 28 percent of the
total value. Yahoo! AFP Photo
