Swiss govt rejects ECB plan to slash 1000 banknote
Swiss officials have no plans to follow the European Central Bank and consider withdrawing their highest-denomination banknote to help fight crime. A day after ECB President Mario Draghi told lawmakers that there's "increasing conviction" around the world that such bills are used for criminal purposes, Swiss National Bank Spokesman Walter Meier said that his institution "isn't thinking about getting rid of the 1,000-franc note."
Draghi has told lawmakers twice this month that officials are reviewing the 500-euro ($559) note, which law-enforcement officials say makes it easier for criminals and terrorists to smuggle large sums of money. There were more than 43.3 million of the more valuable 1,000-franc ($1,015) bills in circulation as of November, according to Swiss central bank statistics, more than twice as many as in 2000. Switzerland's steadfastness on large-denomination bills risks making the country a black sheep in financial circles once again after international pressure forced it to all but give up banking secrecy for offshore accounts. The matter has become a potential focus of the Group of 20 nations, whose finance ministers meet this month in Shanghai.
More than $2 trillion in money related to illegal activities is moved globally each year, with corruption amounting to another $1 trillion, according to a report that Peter Sands, the former chief executive officer of Standard Chartered Plc, presented earlier this month. He said the 1,000franc note, the 500-euro note and the $100 bill should be eliminated and called for an agreement by the G-20, which Switzerland isn't a member of.
According to calculations by Swiss newspaper Neue Zuercher Zeitung published on Feb. 4, storing the equivalent of $1 billion in 1,000franc notes would take up less space than in 500euro notes or 1,000 Danish-krone bills. Charles Goodhart, a former Bank of England policy maker and an authority on money supply, told a conference last year that the SNB was "absolutely shameless" in its issuance of high-denomination notes.
The SNB produces notes in a manner "commensurate with demand for payment transactions," according to its website. "The high proportion of large denominations indicates that banknotes are used not only as a means of payment but also - to a considerable degree - as a store of value," it says. Although Switzerland ranks among the world's most tech-savvy countries, its 8.2 million inhabitants are particularly partial to paying with cash, according to Bank for International Settlements data.
The introduction this year of new due diligence rules for retailers accepting cash payments in excess of 100,000 francs met with skepticism among some lawmakers, who argued the right to pay anonymously was a basic liberty.
Draghi said on Monday officials were "reflecting" on use of the 500-euro note, just days after euro-area finance ministers asked the central bank to review how the size of its banknotes might assist terrorists' financing.