Jim Armitage: America could finally force Europe to bin the ‘Bin Laden’

If you’re not a drug smuggler, a people trafficker or a terrorist financier, you’ve probably never had a €500 note. Unless you’ve a reason to move large quantities of cash out of sight of the banking system, why would you?

For years in the underworld, it was known admiringly as the Bin Laden: you know it’s out there, it moves around a lot, but you never see it. Perfect for ill-gotten gains.

Today, Peter Sands, the former chief executive of Standard Chartered (itself fined on his watch for breaching money-laundering rules) waged war on the note for precisely that reason.

In a research paper for the Harvard Kennedy School, he says it, along with the $100 bill and £50 note, plays barely any role in the legitimate economy where higher-value transactions are nearly all done with plastic.

I’m not convinced of the case against the fifty nicker. These days, £50 doesn’t get the plumber out of bed. And when he does turn up, he never has a credit card machine. So paying in fifties can make sense. But €500 — nearly £400 — is a different matter. There aren’t many instances when law-abiding people need a banknote so valuable you can fit €20,000 in a cigarette packet.

Police warned eurozone officials about this long before the currency was launched, and the Serious Organised Crime Agency persuaded UK bureaux de change to stop issuing them years ago. But Continentals — particularly in Italy and Germany — remain fond of them. Tax haven Luxembourg is such a fan that it issued nearly two times its GDP in big banknotes in 2013 — you can draw your own conclusions.

My guess is Europe will dig its heels in, no matter what Sands and his Harvard wonks declare.

But there is one major actor who might have the power to outweigh Europe’s intransigence: the US. Faced with the lack of funding or political interest among European states in pursuing corrupt cash, the US Justice Department has prosecuted illicit financing in any country where US dollars (and by association, the American banking system) were involved.

As a result, crims the world over have been ditching the dollar for the euro as their currency of choice. As the FBI’s probes are increasingly halted by its targets’ shift to euros, a frustrated Washington DC may push Europe to take action and get rid of these high denomination notes.

They got Bin Laden in the end. Perhaps they’ll do the same for the note that took his name.

Lobbyists clamouring for a cut in business rates might cast a glance at today’s Institute for Fiscal Studies Green Budget.

Even with plans to slash public spending to levels not seen since 1948, the IFS says, it’s still likely the Chancellor will need to make big tax rises to hit his promised budget surplus by 2020. With pledges to cut income tax and corporation tax, business rates are one of the few pots he has left to plunder.