Friday, April 02, 2021
Schein can’t be killed
There are still plenty of 500s in circulation
Europe’s central banks have stopped issuing new 500 euro bills since 2019. But the purple glow has not disappeared. Hundreds of millions of them still cavort in the wallets, safes and sometimes pillows of EU citizens.
Two years after the issuance of the 500 euro note was stopped, large quantities of the most valuable euro banknotes are still in circulation. In its latest statistics at the end of February 2021, the European Central Bank (ECB) counts a good 400 million pieces of the purple note with a total value of 200 billion euros. This means that the value of the five hundred banknotes still in circulation is a third below the high in December 2015, when € 500 banknotes with a total value of almost € 307 billion were still in circulation. Nevertheless, the bill still represents 14 percent of the total euro banknotes in circulation.
At the beginning of May 2016, the Governing Council decided to stop the production and issue of the 500 euro banknote “towards the end of 2018”. The Deutsche Bundesbank and the Austrian National Bank last issued the purple note on April 26, 2019. The other 17 national central banks of the Eurosystem already stopped issuing the 500 euro note on January 26, 2019. The five hundred notes in circulation remain legal tender and can be exchanged at national central banks in the euro area without any time limit.
In the first twelve months after the issuance stop, almost 37 million 500-euro banknotes with a total value of more than 18 billion euros were deposited with the Bundesbank.In May 2019 alone, according to the central bank in Frankfurt, five hundred were worth over three billion euros back. “Since then, the value of the monthly 500-euro banknotes deposited with the Bundesbank has tended to decline and was most recently in the range between half a billion and one billion euros,” explained Bundesbank board member Johannes Beermann.
Measure against the financing of terrorism and undeclared work
By dispensing with the 500 euro note, proponents hope that terrorist financing and illegal work will be pushed back. “The Bundesbank basically supports measures aimed at reducing crime,” affirmed Beermann. “With regard to the issue of the 500 euro banknote, we are still not aware of any studies that conclusively prove the effectiveness of this measure.”
At the same time there is “the justified interest of the population in owning and using large denominations,” said Beermann. “These denominations can be used for larger purchases such as the purchase of bicycles, used cars or the down payment for a trip. They also represent a space-saving way of storing value.”
In the second series of euro banknotes, there is no longer a 500 euro note. The Hundreds and Two Hundreds with revised security features have been in circulation since May 2019. And the number of 100 and 200 euro banknotes in circulation has risen rapidly since then.
“Last year there was another surge in demand for the two largest denominations during the corona pandemic,” said Beermann. The Eurosystem’s banknotes in circulation increased by more than nine billion euros for the 100-euro note in March 2020 alone, and for the two-hundred-euro note the increase was twelve and a half billion euros. “The demand that was previously attributable to the 500-euro note seems to have largely transferred to the next two larger denominations after its issue,” Beermann noted.
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