Economy
Wednesday, May 04, 2016
The ECB takes the 500 Euro note from circulation – officially by money launderers and criminals to make life more difficult. But many critics suspect that it probably still is very different designs.
The European Central Bank (ECB) has decided that from the 500-euro bill. Only by the end of 2018, the largest banknote in the euro area is to be output. New does not want to print the ECB. The 500-euro note is to remain legal tender. Critics see this as the entry into the total cash abolition. n-tv.de explains what motives could be behind the decision, saying what for and against each statement.
fight against money laundering
Officially founded the ECB will step in order, terrorist financing, wanting to curb money laundering and illegal employment. “The 500-euro bill is a tool for illegal activities”, has ECB chief Mario Draghi said. In fact, the 500 is rather used as a store of value rather than cash. Most ordinary people have probably never had one in his hand. According to the ECB, they account for only three percent of all euro notes, but cover 28 percent of the monetary value. Small size, high value, hard to prove -. Tempting for shady characters, especially in Germany
criminals were in fact dependent not necessarily on large bills, Bundesbank board member Carl-Ludwig Thiele holds against. Criminals it should following the demise of the 500 now does indeed have a harder time. Their machinations but they are unlikely to end. There is also in countries with smaller bills such as the US no less organized crime. There the hundred-dollar bill is the largest payment.
Also, one may doubt that terrorists, drug traffickers and mafia clans launder their assets only on cash. The Islamic State “not oil-billion in 500-euro bills under pillow in Syria” hiding his, MEP Fabio de Masi told (Linke). Criminals move their money regularly through the official banking system, using front companies or nominees. There, too, could improve control.
Stronger control of citizens
critics say the money laundering argument therefore for advanced. Look at the 500 abolition the beginning of the end of the cash. “Freedom Dies piecemeal”, it brings Bundesbank board Thiele to the point. The concern is justified: Larger amounts can only be paid if the cash actually should be completely abolished. Then the state can follow any movement of funds – and therefore who owns what sells and why
but
Of these, so far no question.. While Spain, France, Italy and other countries have introduced limits on cash payments in the euro crisis. And Finance Minister Schaeuble is now demanding a ceiling of 5,000 euros. But so far he does not stumble so on reciprocal love. And only the 500 and not all euro notes to be abolished. And even if the end of the cash should come sometime, must not be the end of freedom: in Sweden is paid for years almost without cash
support the banking system
“Without cash are. we become hostages of the banks, “says economist Max Otte to another argument against the end of the 500ers. “The policy has the financial sector already bought largely, now the citizens are to be made to blackmail.” That’s true: the fewer large bills there are, the less money can entertain people. And if they can not withdraw their money, banks can not go bankrupt
There is a side effect of the cash limit. In a crisis, it supports the banking system. For less money means less possibilities of escape. A total elimination would make people totally dependent on the bailout policy. Even haircuts as in Cyprus, were mitra Siert as savers because their banks had gambled, they could not escape
speaks against the bank bailout as the true motive behind the 500-elimination:. Capital controls and Abhebelimits you can much faster and introduce effective overnight to protect the banks, such as the Cyprus crisis and the debt drama in Greece have shown. But one does not have to gradually do away with the entire cash.
prelude to penalty interest on a broad front
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This is why critics suspect another reason behind the decision. As the new president of the Ifo Institute Clemens Fuest they see from the 500 the prelude to the expansion of penalty interest, which require the central bankers, since June 2014 the banks. “For the ECB, it would easier to continue to shut down the negative interest rates,” says Fuest. “Because cash has no negative interest rates, but probably electronic accounts.”
In fact, banks are already thinking to store excess money somewhere in his own vault, take it to park overnight at the ECB and it also yet it pay as before. You want it, so to speak rather stuck under her pillow. For citizens it is no different: If penalty interest for average savers actually become a reality across the board, many would probably just take off their excess money and pack under the mattress
The circulation of money could then stalled.. It is possible that the ECB now intends to prevent by scarce cash. Meanwhile close itself Sparkassen penalty interest for normal customers no longer made. But they are soon introduced across the board for small savers, but is unlikely.
Source: n-tv.de
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