A former Treasury secretary is making a case for killing off the Benjamins.
Harvard economist Larry Summers, who was Treasury secretary under President Bill Clinton and a former economic adviser to President Barack Obama, says removing high-denomination notes such as the $100 bill and the 500-euro note would have a negligible impact on ordinary citizens and legal commerce, but it would make it more difficult for criminals — including tax cheats, drug traffickers and terrorists — to conduct their illicit activities.
“The fact that … in certain circles the 500-euro note is known as the ‘Bin Laden’ confirms the arguments against it,” Summers writes in a column in the Washington Post.
Summers is referring to a recently published paper by Peter Sands, a senior fellow at the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government and former head of the Standard Chartered Bank.
The paper states that getting rid of high-denomination bills would help deter tax evasion, financial crime, terrorism financing and corruption because big bills are criminals’ preferred payment method “given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved.”
Let’s say a criminal needs to transport $1 million. If he’s using $100 bills, he could fit $1 million in one briefcase, which would weigh in at about 22 pounds, the Economic Times explains. If the $1 million is denominated in 500-euro notes, it could fit in a small sack weighing about 5 pounds.
But wielding that much cash gets a bit trickier if criminals are forced to use lower denomination bills. For example, $1 million in $20 bills would require four briefcases and weigh just over 110 pounds. Suddenly making a $1 million transfer or payment isn’t quite so easy.
Summers writes that although removing existing high-denomination bills from circulation may be a step too far at this point, the United States and the European Union could agree to stop printing them and “make the world a better place.”
According to this data from the Federal Reserve, the $100 bill is the second most common note in circulation in the United States, just behind the $1 bill.
In fact, $100 bills make up a whopping 80 percent of the $1.4 trillion in U.S. currency that’s in circulation today, CNN Money reports. Much of this American currency is held outside the country, CNN Money noted.
The European Central Bank is considering ditching the 500-euro note, Reuters reported this week.
“The 500 euro note is being viewed increasingly as an instrument for illegal activities,” ECB President Mario Draghi told lawmakers in the European Parliament.
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