Why do I need to ban banknotes in 100 dollars and 500 euros

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In February, the John Kennedy Government School at Harvard University published a report on the dangers of large bills to the economy. The emergence of the study spurred a discussion about whether banknotes in denominations of 100 dollars and 500 euros really should exist. "Medusa" gives a brief retelling of the Harvard report.

Cash is the most popular way to settle criminals., it is more popular than bitcoins, gold and diamonds. Therefore, the prohibition of large bills would help in the fight against tax evasion, money laundering, terrorist financing and corruption. Scientists believe that the forced transition to small denominations would significantly complicate the lives of those who are accustomed to carry out cash payments.

The study mentions not only euro denominations of 500 and 100 dollars., about the possible ban of which they began to write to the media. According to scientists, it would be useful to abandon the most "senior" bills of all the most popular currencies, including 50 pounds sterling and 1000 Swiss francs. “These banknotes are the preferred method of payment among those who conduct illegal activities. The use of banknotes guarantees anonymity, cash flow is little tracked, it is relatively easy to transport and transfer them, ”the report says.

Banning large bills will not lead to economic collapse, because they do not play a big role in the legal sector of the economy. On the contrary, it will lead to an increase in tax collection, a decrease in crime, corruption and terrorism.

History knows cases of rejection of very large bills. In 2000, Canada abandoned the use of a banknote of 1000 dollars, and in 2014, a banknote in 10 000 dollars was withdrawn from circulation in Singapore.

Banning large bills will not lead to victory over the shadow sectors of the economy. It is only about raising costs and risks for criminals. They can still switch to their calculations for jewelry, virtual currency or disguised bank transfers. However, none of these methods is an accepted cash replacement. All options have significant drawbacks: a bank transfer is easy to track, and it can take up to three days, bitcoins are unstable, and few people use them, paying with gold and diamonds is too expensive.

Criminals can also always go to the next note by seniority. This threat is particularly relevant in the EU: the ban on euro denominations of 500 will only lead to the fact that 200-euro notes become the most popular. The ban on 200-euro will shift the attention of the criminal world to 100-euro bills. Ideally, scientists say, you need to gradually abandon all large banknotes, imposing restrictions on their circulation and encouraging the use of smaller money.

A large denomination is perhaps an anachronism in general in the modern economy., given the ease and availability of electronic payments. However, Harvard’s full cash ban is not offered. Researchers recognize that paper money is still popular for small purchases. However, the more expensive the purchase, the higher the likelihood that it will pay by card.

Russia is one of the “heroes” of the report. According to the central bank of Germany, almost half of all euro notes in 500, issued between 2002 and 2009, turned out to be in Russia. According to the US Treasury Department, almost 2006 billions of dollars “walked” in 80 in Russia. The authors of the report also recall that the news about the replacement of 100-dollar bills with new type bills in 1995-th year in Russia was met “with some panic”: people were ready to pay for the exchange of old dollars for new ones.

Facts we learned from a study about the benefits of banning large bills

1 million dollars is 2,2 a kilogram of money 500-Euro bills; 5,5 kilograms 200-euro bills; 11 kilograms 100-euro; 22 kilogram 50-euro.

If you use 500 euro notes, 5 million dollars can fit in one suitcase. For the transportation of a million dollars 100-dollar bills enough for just one suitcase (moreover, a third of the suitcase will even remain free).

In criminal circles, the 500 euro bill is called "Bin Laden."

Five thousand ruble notes account for 69% of all Russian money. 100 dollar bills make up 78% of all cash in the United States.

The attack on the editors of Charlie Ebdo cost six thousand euros. For the 11 attack of September 2001, each fighter received 10 thousands of dollars.

Cash from Russia most often “travels” to the Baltic countries, as well as to Poland, the Czech Republic and Bulgaria (Europol data).

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