€500 note to be scrapped in order to hurt organised crime

It's known as the "Bin Laden" of bank notes...

€500 note to be scrapped in order to hurt organised crime

Picture by: Thanassis Stavrakis / AP/Press Association Images

The European Central Bank votes today on ending the production of the €500 note.

It means the hefty denomination will likely not be a part of the "Euro 2 series" that has already seen the €5, €10 and €20 notes revamped from their original 2002 design.

The paper note with the highest value will become the €200 once all €500s have slipped out of circulation in a number of years.

After that point, people with the notes could redeem them in Eurozone banks, though customers could be required to disclose how them came into possession of them.

The popular move is being made due to concerns that the €500 note - known as the "Bill Laden" due to its links to criminal behaviour - makes it easier for those involved in organised crime to make illicit transactions of large amounts of cash.

They even occasionally trade above their face value due to its size and portability. They currently account for 3% of the total banknotes in circulation and 28% of the total value.

According to a recent Harvard study:

"Such notes are the preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved".

In March, French finance minister Michael Sapin argued that it is "used more for hiding things than buying them. It is used more to facilitate transactions which are not honest than to allow you and me to buy food to eat".

Germany was initially the strongest supporter of a €500 note being issued, due to its proximity in value to the old 1,000 Deutsche Mark bill.

Critics of the abolition of the €500, particularly in Germany, argue that it is a step to creating a totally cash-free society.

Friedrich Schneider, an expert on the shadow economy at the University of Linz in Austria, told the German media recently:

"Organised crime isn’t stupid. Most money is laundered without cash via bogus companies".