In what is being reported as an effort to impede criminal activity and terrorism, the European Central Bank announced that it will discontinue issuing €500 notes around the end of 2018. However, the ECB was quick to affirm that the €500 notes already in circulation “will remain legal tender and . . . always retain their value.”
€500 notes have not been produced since 2014 and account for only 2.3 percent of banknotes in the eurozone; yet they make up nearly 30 percent of the value of banknotes in circulation there. The ECB plans to scrap the plates from which €500 notes are printed.
This move, however, is not without opposition by some of the eurozone’s most influential nations, namely Germany and Austria where the people are culturally attached to cash. Further, Germans and Austrians see the ECB’s ultra-low interest rates as an assault on savings.
Some critics of the discontinuance scheme see a more nefarious motive: that of forcing savers to deposit their money in banks where negative interest rates could eat into principal. So far, negative interest rates are imposed only on commercial banks that hold funds with the ECB, but the fear remains that negative rates may be foisted overnight on depositors.
The ECB scheme raises fears that the US $100 bill may be next on the chopping block. What’s to be remembered is that the US Treasury has never called in a banknote. While it is true that $500 and $1,000 bills were slowly retired as they made their way back into the banking system, they remain legal currencies.
It is unlikely that the US $100 bill will ceased to be printed. It is worth only €88, a paltry amount in today’s world. Besides, as stated in a previous post, War on Cash, pallets of $100 bills are the Pentagon’s and the CIA’s favorite way of quietly paying off our “allies” and operatives in clandestine operations.