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Preview: Comments on Peter Martin: More $100 notes than $20 notes?

Comments on Peter Martin: More $100 notes than $20 notes?

Updated: 2015-09-30T08:04:03.541+10:00


And everyone's okay with this?


And everyone's okay with this?

I have read something similar, about when the Euro...


I have read something similar, about when the European bank planned to introduce the 500 Euro note, the US were shitscared that the US dollar would collapse. Why? Because much/most? US currency, particularly high domination stuff, is used overseas. Primarily in crime, drugs etc.

As to Australia's notes: Another big location for $100 notes is the Casinos and gamblers. I'm a semi-serious poker player, and I have 4 $100 notes in my wallet. Not long ago I had 40 in my bankroll at home, but I banked it to invest it.

This analysis has a bit of a history in other coun...


This analysis has a bit of a history in other countries.

About 1998, someone in the Federal Reserve in the US did the same thing and found that some massive amount of circulated currency (about 50% of that on issue from what I recall), was in the form of very high denomination notes
($500 I think).

He then did a survey that stopped people in the street and did a count of what they were actually carrying. He concluded that most of that money was actually in the black economy and being used in drug deals etc.

It was then recommended that the US government recall existing notes and reissue them with a new design in order to hinder organized crime, but the recommendation was refused.

About a year later the Fed became aware that the new Euro notes would be issued in denominations up to 500 EUR and they approached the then Bundesbank suggesting that it mightn't be a good idea as it would facilitate crime. They requested that the highest denomination Euro be only 100. (There's also some political backstory here as the Americans were clearly trying to preserve the primacy of the USD against a new competitor, but never mind.)

What did the Bundesbank say? "We know. Look - large parts of the European economy are black, in some parts like Italy and Spain it may be as high as 20% of GDP."

"But as far as we're concerned, liquidity is much more important during the changeover and we're not going to threaten our economies - and the success of the Euro - by indulging in crime fighting".

I haven't found a reference for this but I read it in the International Herald Tribune at the time, meaning it was probably reprinted from the NY Times.