Taking away a euro denomination favored by less-than-lawful elements of society, the European Central Bank said on Wednesday (May 4) that it was no longer going to print the €500 bank note.
The New York Times reported that the €500 note was big enough and moved freely enough across locales to be a favorite of terrorists and money launders in order to help disguise activity. The larger the note’s value, the easier it is to use in relatively smaller quantities for payoffs and payouts; as NYT stated, $1 million worth of notes could fit into a small bag (easily transported).
The phaseout will take place over the next two years, which would leave the €200 note as the largest denomination.
In a hint to the popularity of the money and its usefulness for, say, drug cartels, €500 notes are referred to as “Bin Ladens.” The drumbeat for the ban, NYT said, came after the terrorist attacks that hit Paris in November and Belgium just in March.
The bank also said it would not actually declare the notes to be worthless.
One unintended impact would be the effect of the move on an interest rate environment where the central bank has kept money cheap. Fewer bills in circulation may mean that banks go to lend money and thus stimulate the economy, according to NYT.