French MPs want €500 banknotes scrapped to counter fraud

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€500 banknotes should be scrapped to cut down on money laundering, French MPs suggested yesterday (10 September) in a report presented to the French parliament two weeks ahead of the G20 summit in Pittsburgh.

The measure is one of 30 which were presented in a report by a cross-party group of MPs, ranging from the ruling centre-right UMP party to the communists.

“France should push for the end of the €500 note,” says the report, arguing that “since the withdrawal of the $1,000 bill, the €500 note represents the next highest value piece of cash available around the world today”.

“20 bank notes of this type represent €10,000 in cash,” said socialist MP Didier Migaud, the socialist president of the French lower chamber’s finance committee, quoted by the daily Le Parisien.

The report also recommends fixing the threshold for payment in cash at €3,000 for individuals and €1,100 for commercial transactions.

A “fraud squad” of specially-trained police officers under the authority of a public prosecutor should also be set up, the report says.

In France and several other eurozone countries, purple €500 banknotes are not welcome in many shops. Moreover, they are not accepted as payment for toll fees on French highways near Germany for example, along with the €200 note.

Along with the cash crackdown, yachts registered in tax havens should be banned from the territorial waters of France, the report argues.

It says France should establish a list of non-cooperative countries – those involved in money laundering – and restrict access to French markets for companies and their subsidiaries based in these territories.

During the negotiation period before 1 January 2002, Germany pushed for the €500 note, replacing its 1,000 Deutschmark bill (DM1,000 = €511) and even proposed the creation of a €1,000 note. Other countries like Italy, Greece or Austria advocated smaller banknotes of €1 and €2.

According to the European Central Bank, 550 million €500 notes are currently in circulation across the world. There are 4,891 million €50 banknotes, making it the highest in circulation but also the most counterfeited (43% of counterfeit bills are of €50 denomination). 

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