The U.S. government has no intention of scrapping the $100 bill in an attempt to thwart criminal activity, The Wall Street Journal reported.
Peter Sands, a Harvard University fellow and former bank executive, wants to get rid of the $100 bill, the 1,000 Swiss franc note, the 500 euro note and the 50 British pound note because those high denominations make it easier for criminals to conceal large sums of cash and eliminating them would make it tougher for the bad guys to do business.
“My argument is if you have something that society doesn’t really need but illegal activity really likes, why are you producing it?” Sands, a former chief executive of Standard Chartered PLC and a senior fellow at Harvard’s John F. Kennedy School of Government, told the WSJ.com.
A spokeswoman for the Treasury Department said the agency has no plans to drop the $100 bill. "Even if the U.S. did drop the $100 bill, several government agencies predicted criminals would simply gravitate to whatever denominations were available," the WSJ reported.
Several agencies, including Treasury, the Federal Reserve and the Drug Enforcement Administration, cited numerous reasons to the Journal for keeping Benjaim Franklin’s currency portrait.
Highlighting some of the arguments:
- "The $100 bill is important globally. There are 11.1 billion $100 bills in circulation, and about 75% of them are held in other countries, in part because the U.S. dollar is the dominant international reserve currency," the WSJ reported.
- "Replacing the bill would be expensive. It costs 14.3 cents to produce a $100 bill. The next largest denomination, the $50 bill, costs 10.6 cents, but twice as many would have to be printed, at a higher cost overall. (The $100 bill is more expensive to make because of its security features.)"
- Transporting a greater number of smaller bills would also cost more.
- The U.S. has already retired its largest notes. Until 1969, the U.S. issued $500, $1,000, $5,000 and $10,000 bills for circulation. "For a time, it even issued $100,000 bills, which were used to facilitate transactions between Federal Reserve Banks. Those large notes were retired for lack of use, according to the Bureau of Engraving and Printing."
- Regular Americans use $100 bills. Some automated-teller machines even dispense them. (But a report by the Federal Reserve Bank of Boston found that on a typical day, only 5.2% of U.S. consumers carry a $100 bill.)
The 500-euro bill is being discontinued amid concerns that the big banknote has become too handy for money launderers, the AP reported last month. The European Central Bank, which is the monetary authority for the 19 countries that use the euro, made the decision at a recent meeting.
Banknotes currently in circulation will remain legal money for now but no additional ones will be issued from existing stocks after late 2018.
The ECB said it was "taking into account concerns that this banknote could facilitate illicit activities."
It assured that the bills could be exchanged at national central banks of euro member countries "for an unlimited period of time."
The bills — the biggest denomination for the euro — are not often seen in day-to-day circulation, and some merchants don't take them. Yet they make up around 30 percent of the roughly 1 trillion cash euros ($1.15 trillion) in circulation and have turned up in money-laundering investigations.
A million euros in 500-euro bills weighs 2.2 kilograms, or just under 5 pounds, and fits in a laptop bag. Using 50-euro bills, the same million would weigh 22 kilograms, or 48 pounds, and would require an inconveniently bulky suitcase, the AP reported.
However, Newsmax Finance Insider Andrew Packer sees such moves as just more evidence of Uncle Sam’s “burning desire to poke his nose in just about every financial transaction.”
"The way I see it, this is all part of the government’s Cold War on cash. This story, while anecdotal and unscientific, follows on calls from current and former government officials to get rid of high denomination notes. The European Central Bank just announced this month that the 500 Euro note is going the way of the USSR. And there have been calls in the US to get rid of the $100 bill," Packer wrote in a recent blog.
"The signs are there. Governments are getting increasingly skeptical about “we the people” holding onto our own money," Packer wrote.
"This Cold War on cash could be a tinfoil hat theory of mine. But the facts keep moving in a clear direction: it’s going to be harder to hold cash going forward. The government will want to make it costlier to do so. At the same time, something like negative interest rates will make it more expensive to keep your money in a bank as well."
(Newsmax wire services contributed to this report).