Since 2016, the ECB had said a first goodbye to 500 euro banknotes. That year, in fact, Frankfurt had taken the decision not to print new tickets of that amount, considered by the control bodies as a tool capable of facilitating tax evasion and the criminal economy. The definitive cessation of the issue dates back to 1 January 2019. Now, however, reports Il Sole 24 Ore, five European countries – Italy, France, Spain, Belgium and Holland – would like to accomplish a further step and completely out of the game the purple tickets, depriving them of legal tender and completely expelling them from the payment circuits. This is a request contained in a Position Paper sent to the European Commission in the summer, together with the presentation of the package of measures to combat money laundering which also includes the establishment of an Anti-Money Laundering Authority which Italy would like to host the headquarters.
From 2016 to today, the circulation of 500 euro banknotes has significantly decreased, going from 612 million pieces in January of that year, equal to a value of 306 billion euros, to 441 million pieces in January 2020, which corresponds to a value of 220 billion euros. This is an important decline, partly due to the usury of the banknotes, which are consequently converted into smaller denominations before being lost, but even a decrease of about one third in the circulating value of the proposing countries does not appear sufficient. And this despite the fact that the 500 euro banknote also has some advantages. So much so that in the detection of counterfeit banknotes dating back to the second half of 2019, the purple 500 euros are one of the least falsified denominations. The percentage based on the denomination of the total counterfeits withdrawn from circulation is 1.4%, in practice no more than 4,300 banknotes out of a total of hundreds of millions.
But the defect of the 500 euro banknote is its great value in relation to the reduced physical space it occupies. It is in fact a denomination 6 times higher than that of the second most widespread banknote in the world, the 100 dollar bill which bears the effigy of Benjamin Franklin. And this feature naturally facilitates money laundering, drug trafficking and illicit activities in general, tax evasion.
A problem that had already been highlighted in 2010 in Great Britain, at the time a member of the European Union. In fact, since April of that year the exchange offices of the United Kingdom (where the pound naturally circulated, since the UK never thought of joining the euro) had stopped distributing 500 euro banknotes precisely because of the risks of facilitating the illegal economy. The Serious Organized Crime Agency, after an investigation lasting about eight months, had found that about 90% of the 500 euro banknotes in circulation in the United Kingdom were in the hands of criminal organizations.
Traceability and fight against tax evasion
The European countries that have submitted the Proposition Paper to the European Commission, aware of these risks, therefore ask the Commission to engage with the European Central Bank to consider further steps on the 500 euro banknote, including the introduction of measures aimed at a phasing out to allow for progressive conversion by the public into smaller denomination banknotes under the supervision of banks and the Central Bank. The fight against major cuts is in fact part of the transaction traceability objectives that almost all European countries, and in particular Italy, have set themselves precisely in order to combat tax evasion.