Criminals require $100 bills and 500-euro notes to complete transactions, and some government officials want to end distribution of those notes for that reason.
The $100 bill is America’s longest-lasting currency symbolizing wealth. Known historically by the slang term “C-Note” and more recently as a “Benjamin”, the $100 bill is currently the largest denomination of currency printed and issued by the United States government.
Some people want to do away with it, because it is also the currency of choice for the world’s criminal element, most importantly in the drug trade.
In an article published in the Washington Post, former Secretary of the Treasury Lawrence H. Summers, who is currently a professor at Harvard University, wrote about the suggestion that the $100 bill, as well as the 500-euro note or 50-pound note, be abolished.
Summers noted a research paper from a group of Harvard students in conjunction with University professor Peter Sands discussing the pros and cons of eliminating the high value notes. It’s the “cons’’ that make the suggestion viable.
“Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime,’’ Summers wrote. “He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500-euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note.”
The Sands research also notes that high denomination notes are frowned upon and rarely used in normal legal commerce. In a recent article on the topic, the Los Angeles Times pointed out that even in legitimate business, high-value notes are used in transactions mainly to avoid taxes.
“A moratorium on printing new high denomination notes would make the world a better place,’’ Summers concludes.
The 500-euro note has more than five times the value of the $100 bill. While segments of the European community dislike the euro, there are some countries who endorse its use strongly and would argue against elimination of the 500-euro note, even though the European Commission has taken the move under advisement.
Summers notes that Luxembourg officials have argued against the elimination of the 500-eruo note, but states that Luxembourg has a significant portion of its economy tied to tax havens and other forms of banking secrecy that require the use of high value notes.
But there are more legitimate arguments against the idea of eliminating high-value notes, one being that eliminating the “Benjamin’’ would not stop criminal transactions, it would only make them more problematic.
There are also people who appreciate the $100 bill for legitimate purposes.
In 2014, the Federal Reserve Bank of Boston estimated that about 20 percent of American consumers carried $100 cash or more in their wallets and one-fourth of those carried at least one $100 bill.
Cash is also preferred among consumers who do not trust the electronica transfer of money. Recent years have shown that electronic payment is not a secure exchange of funds.
Although the United States Federal Reserve just moved off a zero interest rate and raised its prime rate to 0.25 percent, some countries (Japan most notably) are implementing a negative interest rate, which actually charge for deposits. That move would cause potential depositors to hold on to cash rather than spend it by depositing it.
The idea of a negative interest rate is to discourage saving and encourage spending, but in the northern European countries of Sweden, Denmark and Switzerland, the negative interest rates are causing Europeans to hold on to their cash, and large bills are easier to store than small ones.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.