Crime Pays the Euro
If you have had the opportunity to travel throughout Europe and talk to the locals, you would know that the €500 bill is not often seen or used. Strangely enough the €500 note makes up 35% of all Euros in circulation, by value.
I recall a rather fierce argument with a Greek shopkeeper some years back about my attempts to pay with one. I later learned that these bills are counterfeited in large amounts and that most shopkeepers, as well as, private individuals cannot verify their authenticity and do not accept them. Fairly plausible argument. Makes perfect sense, actually. Fake dollars are so easy to find in most of the ex-Soviet Bloc, that even a high-tech equipped currency exchange will think twice about accepting them.
All of this info makes the following read quite ominous. As it turns out the aforementioned 35% is often found in cereal and shoe boxes, often in the possession of drug mules and/or fake walls of abandoned buildings. Yep, the most avid users of the €500 and it's less glamorous cousin, the €200...are the drug dealers, smugglers and racketeers of the old continent.
Back in 1998, the U.S. Treasury official Gary Gensler noted that $1 million in U.S. bills weighed 22 lbs and that an equal amount in (at that time non-existant) €500 bills would tip the scales at a meager 4.4 lbs. Hint, hint.
Not surprisingly, the major beneficiary of the criminals' demand for the €500 bill is...the European Central Bank. I won't go into "seniorage" here, but it is a worthwhile point to ponder. ECB officials are mum on the subject and calmly point out that they do not plan to take the supersized bill out of print. They cite production and processing costs as the culprit.
Beckoning the question, is it time for the Federal Reserve to ramp up the creative printing presses? Perhaps a $10,000 bill with all of the founding fathers standing by Lady Justice holding scales full of powder?
I include this tidbit of news for weekend novelty's sake, as well as, for some of our currency trading brethren here on WSO. The next time you decide to strip or stack your hedge, think about event driven trades...
Namely, the next time there's a large racket money seizure somewhere in Europe, (via the ECB's murky laws of supply and demand) a jump in the Euro's value is guaranteed.
How convenient...
Good to see governments letting markets do their thing without interference, everywhere on Earth.
Rolls eyes, hocks loogey, proceeds to lunch with three rolls of quarters...aaaaah
Rather than a $10,000 bill I'd prefer hard currency.
How much was the item you were purchasing? Were you being a complete dickhead messing around with the guy, or was the item of reasonable value compared to the bill? I did it for a laugh once. I bought a 50 cent soft serve at McDonalds with a $50 bill. They weren't very happy about it lol!
Note: This wasn't in America.
Don't recall the details, 50
Saw this in the journal. Interesting stuff. . Yet another way central banks cause market disparities.
Hah. You use the same tactics in Asia (Bali in my experience) buddy. Some tool hawker thought this would be a good idea to try on my Dad. He started at 5m Rupiah for a pair of glasses and Dad paid no interest, so he dropped it very quickly via couple of million, 1m, couple hundred thousand, etc. all the way to 10k! NEVER believe hawkers (and others actually). Always barter your way down if it's applicable. If any of you guys don't know this, the show interest in the item then say too much/no no and walk away tactic gets very favorable reactions and price-drops (at least in Bali).
^^^ Everywhere In the world.
What a joke! You can't even use the domestic currency inside the country due to authenticity issues. Third world type sh*t.
Have you ever tried to pay your sandwich with a $100 bill. Look at the face of the shop keeper. Now, let's imagine the same scene but this time with a $500 bill. Now, you get it?
The 500€ bill was created to please German people who pay almost everything in cash. In some countries like Belgium, France, there is a limit beyond which you can't pay in cash (about $2000), so the 500€ bill is rather useless. By the way, we still have the 200€ bill, which is not that bad!
By the way, the currency in the UK is the Pound and NOT the Euro...
I don know that as I live in the UK. They stopped selling it in the UK
here is the story anyway
http://uk.reuters.com/article/idUKTRE64C1JN20100513
@barboon: affirmative. More true in some countries than others. Some of those people are desperate for a sale.
That note got removed in britain as far as I remember
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