The battle over the future of cash in Europe took another major turn on Monday.
The governing council of the European Central Bank has officially started a process to abolish €500 bills, Handelsblatt learned Monday.
Mario Draghi, the ECB’s president, confirmed later Monday afternoon that the central bank was “considering action on that front” during his quarterly testimony before the European Parliament.
The ECB’s top decision-making body recently adopted a declaration of intent on this topic, insiders told Handelsblatt, which is a strong indicator of how the central bank is likely to decide on the matter in several months’ time.
From the central bank’s point of view, ending circulation of the banknotes is a way to fight money laundering. The bill is used primarily for illegal business, according to corruption and crime experts. Many retailers in Europe no longer accept the purple bills, the highest cash note available in the euro zone.
But it’s an idea that could prove unpopular in Europe’s largest economy, Germany, where many consumers still rely on cash even for larger purchases. Just 18 percent of all transactions in Germany were completed with cards – debit or credit – in 2014, less than any other E.U. country. The United States abolished the $500 note in 1969.