#ECB starts to take €500 out of circulation

Today (4 May) the Governing Council of the European Central Bank (ECB) concluded a review of the denominational structure of the Europa series. It has decided to permanently stop producing the €500 banknote, taking into account concerns that this banknote could facilitate illicit activities. 

The issuance of the €500 will be stopped around the end of 2018, when the €100 and €200 banknotes of the Europa series of notes are planned to be introduced. The other denominations – from €5 to €200 – will remain in place.

In 2015, Europol published a report on the use of cash by criminal groups. Five hundred euro notes account for a third of the one trillion euro of bank notes in circulation. The €500 note is not a common means of payment and it is thought that the money could be used in criminal transactions; indeed, Europol has found this to be the case in a number of their investigations, although another theory suggests that the notes could be being hoarded, rather than being used with any criminal intent.

Europol points to the US, UK and Canada as examples of economies that function well without high-denomination notes. So, while some countries have resisted this initiative, there doesn’t appear to be any real need for this note in the economy.

In view of the international role of the euro and the widespread trust in its banknotes, the €500 will remain legal tender and can therefore continue to be used as a means of payment and store of value. The Eurosystem, which comprises the ECB and the euro area national central banks, will take steps to ensure that the remaining denominations are available in sufficient quantities.

The €500 banknote, like the other denominations of euro banknotes, will always retain its value and can be exchanged at the national central banks of the Eurosystem for an unlimited period of time.

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