I worry that it won't be long before governments criminalize cash. They want to track everything (for a multitude of reasons ranging from taxes to criminal activity), and cash inhibits this.
Even if cash stays with us for another 100 years -- inflation will make it more and more inefficient over time.
Eg.: around 1970 when $100 became the largest bill, it was actually worth about $500 in today's value. So, it lost 4/5 of it's real value.
If you look another 40 years out, $100 will become the new $20, the government will probably not have introduced any new bills, and the amount of transactions you can actually transact in cash will be even smaller.
I can’t remember the last time I bought something worth more than $100 by paying cash. If every bill with a denomination over $20 went away, or if inflation reduced the largest circulating bill to a value of twenty 2010-dollars, I wouldn’t notice.
Not to say that the government should eliminate the higher-denomination bills—just using myself as a data point to suggest there’s not much consumer demand for them.
Ian Cruxton of Soca says that's entirely what investigators expect the gangs to do - but there are reasons to be optimistic because they're trying to disrupt the "business practices" of organised crime and force gangs to make mistakes.
It makes life marginally harder for 'em. Instead of walking around with a briefcase you're suddenly walking around with a suitcase. Instead of having to get one guy you really trust to carry the money you have to get two guys you really trust to carry the money. It's twice as hard to hide your huge cash wad when you travel through customs. Mostly though, the main goal is probably just to annoy them.
The problem is it annoys everyone that deals with significant quantities of cash. I keep cash on hand just in case a bank glitch messes with my checking account. Forcing me to keep larger bills reduces my available hiding places and makes it easier to rob me.
PS: I suggest most people without significant debt keep 2 weeks living expences (food/fuel/etc) in cash just in case.
The main goal is probably to force them out of the UK and into someone else's jurisdiction.
It's similar to the situation that occurred when the Irish Government set up the Criminal Assets Bureau in 1996 (the only real achievement of theirs in my lifetime), all of our major drug dealers and major bank robbers who were operating with impunity up to that point immediately started to flee the country.
They went to Holland, Portugal and Spain mainly. All CAB had to do was produce evidence in a civil case (beyond reasonable doubt, much easier to prosecute than criminal law) that the person had no visible source of income to own the assets that they had (houses, cars, champion racehorses, yachts). CAB could then simply freeze their bank accounts and confiscate their assets. It was the first organisation of it's kind in the world, and there are plans to implement similar models elsewhere due to it's unprecedented success. If all of Europe did this it would make drug trafficker's lives much more difficult - they simply couldn't enjoy the proceeds of their ill-gotten gains, or it would be confiscated before long.
Of course, under the laws of asset forfeiture, carrying around large quantities of cash is a de facto crime in itself, even if you are not engaging in any criminal activities with the money. (Radley Balko has written a number of good articles about it. Here are two of them: http://reason.com/archives/2010/01/26/the-forfeiture-racket and http://www.slate.com/id/2243428.)
That's an interesting point - I normally have very little cash on me and we don't keep any at home as Pin-n-Chip cards are taken by pretty much everywhere I shop.
However, I remember reading about the financial crisis of '08 and how a lot of UK banks (RBS & HBOS) were close to shutting down and how terrified the politicians were that the cash machine and EPOS networks would stop working.
It did make me think that keeping a wad of cash somewhere might be a good idea.
Two weeks' living expenses in 200-euro notes is still a pretty small pile.
Besides, if the shit hits the fan who's going to have change for a 500 anyway? Unless you're just expecting a glitch with your bank, in which case it's best to just have a couple of different accounts.
You wouldn’t want to exchange a suitcase full of cocaine for a suitcase full of gold and then discover, long after the purchaser had flown away, that the coins were 90% pure gold instead of 99.99%.
As long as you trust the ECB to keep inflation down, it probably makes more sense to stick with eurobills. It’s a lot easier to inspect a modern bank note than assay an allegedly gold coin.
So if the primary use of the €500 note in the UK is for money laundering... doesn't that make it easier for law enforcement, too? If they track down the movements of the notes, they should have few false positives.
This exactly parallels Canada'a elimination of the $1000 note, except that the largest denomination now in circulation is the $100 note. Adding an order of magnitude to the weight, bulk and inconvenience of cash transactions (along with requiring paperwork concerning bank transactions involving $10000 or more in cash) may not have done much about large-scale organised crime, but it certainly did make it more difficult to skirt the goods and services tax.
I don't see why they can't continue to do what they're doing and track big notes. If anything, reducing the size of the note would make it blend in with notes used for legitimate purposes.
Tracking 500 euro notes and finding criminal activity is a means of solving problems. Inconveniencing criminals isn't.
There has got to be some moral boundary on taxes. Most government are perfectly willing to cross that boundary. So I actually think that cheating the government of tax revenue can be okay in certain circumstances, but the government, if they could, would do away will all cash, and make all transaction electronic and auditable. Just look at that new regulation in the U.S. where you technically now have to issue a 1099 to anyone who you do more than 600 worth of business with... gas stations, retailers, etc.
I remember another high profile case in which Japanese criminals smuggled billions of dollars worth of T-bills. If high denominations of cash are crippled enough, more organized criminals may go that route.
Sounds like organized crime simply wants the largest note possible to reduce the raw size of their cash. Not sure how that translates to the fact that "Criminals love the 500 euro note."
