Abolishing the 500-Euro Note: Fighting or Facilitating Crime?
Citing grave concerns that "this banknote could facilitate illicit activities," those
desperate inflationists intrepid crime fighters at the ECB have announced that production of the 500-euro note--the so-called "Bin Laden note"--will cease at the end of 2018. To allay public suspicion that this despotic measure portends the beginning of a movement to abolish cash in order to facilitate the passing of negative interest rates through to the retail deposit market, the ECB solemnly assured that the note would continue to circulate as legal tender and be accepted at central banks throughout the euro-zone for an unlimited period. It also promised that lower denomination euro notes will remain and be available in sufficient quantities to meet demand.
Not everyone, however, is buying the ECB rationale for its decision or its assurances that the move does not represent an attack on cash, especially in German-speaking countries. In March German Bundesbank President Jens Weidmann noted that there was no evidence for the claim that crime will be reduced by eliminating the 500-euro note while arguing that the measure risks undermining trust in cash. Relying only on anecdotal data, an EU action plan last year concluded that the notes were “in high demand among criminal elements … due to their high value and low volume.” However, as Friedrich Schneider, an Austrian academic and expert on the black economy pointed out,
Organised crime isn’t stupid. Most money is laundered without cash via bogus companies.
Ewald Nowotny, the governor of Austria’s central bank, shrewdly pointed out that the note's elimination would intensify the debate over the abolition of cash. Of course this is precisely what the ECB bureaucrats and other central bankers are counting on. In their desperate bid to double down on almost a decade of failed inflationist monetary policy, they would use the debate to stampede the public into accepting the elimination of cash as the price to be paid for fighting terrorists and organized criminals. A cashless economy would trap all holdings of monetary wealth within a government-controlled banking system. Central bankers would then be free to open up another avenue for their own criminal plunder of the productive middle class by pushing nominal interest rates deeper into negative territory and to redistribute the stolen wealth to the political class and their bankster and corporate cronies.