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Pillar of the Community
 Canada
1461 Posts |
Of course depending on when demonetization may happen, I just don't see 1973 circulated banknotes keep their denominated value. (Assuming that we are defining demonetization as the Government and the banks will no longer accept these bills in exchange). As it is, today these notes have no collectible value today beyond face and most get banked. There are thousands of post war banknotes that have been demonetized around the world that have no value today.
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Valued Member
Canada
247 Posts |
Hey Guys They are not DEMONITIZING the bills , they are removing them from legal tender Two different meanings
They will always retain their face value ALWAYS ,now that will dwindle with inflation , but as collectors go there will be less and less as people panic and turn them in
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Pillar of the Community
Canada
586 Posts |
I have seen more $1000 notes popping up at auctions though. Not sure if its to take advantage of the the hype or people panicking and wanting to liquidate. I havn't seen these $500 bills though, wouldn't mind picking on of those up.
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Pillar of the Community
Canada
1461 Posts |
Quote:
Hey Guys They are not DEMONITIZING the bills , they are removing them from legal tender Two different meanings. The main target of this exercise is the removal of the $1000 bills off the street due to its continuing use in crime. The ONLY way that can happen is to eventually demonetize the bill (or put a statute of limitations on cashing them out in not legal tender status). Otherwise it's a pointless exercise since in theory as long as the banks and the government accept them, the bills would still hold a value of $1000 on the street until they make their way back to a bank. And actually if you read some of the articles, the reporting insinuates that such statutes of limitation would be put on the bills. Edited by TheCoinHunter
03/28/2018 12:20 pm
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Pillar of the Community
Canada
5324 Posts |
We have all seen movies and real time border patrol, the US mainly with sacks full of 100 dollar bills, I doubt the Canadian dealers are having sacks of 1000 bird series bills, the 10 to one ratio really makes very little difference, but a 7000 dollar bit coin might or shady real estate dealings or the Panama papers surely gives insight, yet the BOC is preoccupied with a minor billion dollar in the bird series.
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Pillar of the Community
Canada
1192 Posts |
The whole idea that criminals use $1000 notes is actually absurd. They would want notes that don't attract attention, probably $20's.
Think of it this way, say I'm packing 25 kilograms of an illicit substance in a duffel bag. A quick google search puts the high end price wholesale for white powder at $15,000 per kilo. So that's $375,000. Banknotes are about 1 gram each, so $375k in 100's would weigh just 3.75 kilograms. Same amount in $20's would be 18.75 kg. Still less weight than the product being bought!
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Bedrock of the Community
Australia
21788 Posts |
Pokermandude: Your entirely plausible explanation reinforces my thinking that Governments around the World really all want us into electronic banking, and as mentioned above, they couldn't care less about our financial security. The cash economy that supports drug dealing is their excuse, not the reason. Too bad for those who have no idea how to operate in an electronic environment such as old people, or those who may be mentally less able than ourselves, or criminals who want to invade our electronic security. The four leading banks in Australia are currently under examination by a Royal Commission. Criminal behavior has been exposed amongst the top executives and employees of all four banks. Legal action with fines, probably totaling into the $billions, could well be the result.  Edited by sel_69l
06/02/2018 01:17 am
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Valued Member
Canada
387 Posts |
As has been mentioned by few people the $1, $2, $25, $500, $1000 notes are going to be losing their status as legal tender.
This means that the notes will not be accepted at any merchant. It also means that these notes will not be redeemed at face value even at Chartered Banks.
They will only be able to be redeemed at face value at Bank of Canada.
So even though technically speaking they will retain their face value there will be a huge hurdle to get that face value. And who knows if the Bank of Canada will require filling out forms for any large quantities of these notes.
In short in investing language they will become very illiquid.
For most common notes of those denominations and those that are not in good condition there will be no collector premium. So practically speaking unless the owner of these notes is willing to go to Ottawa to redeem them they will just sit with them collecting dust and depreciating in value.
In fact there will potentially be agents (reader dealers) who will offer 80 cents on the dollar for these "non-collector" notes in these denominations. The reason for that is that they will want to discount them to allow them to go to Ottawa to redeem them.
Something similar happened in other places e.g. notes that were replaced by Euros.
My advise to anyone would be that if you have any substantial quantities of these denominations and if you currently are unlikely to get any more than face then take them to the local bank while you can. If currently you could get more than 20% of face from coin and currency dealers you probably could hang on them.
For many people keeping a few bundle worth of ones and twos may not spell such a problem but if the total value of these notes in possession gets higher and they are presently valued at within 20% of face in the catalog it would be best to let Bank of Canada have them while your local bank is willing to ship it to them.
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Pillar of the Community
Canada
1461 Posts |
In my opinion (and as mentioned above) the same scenario will happen with the more common circulated ($1 - $20) bills as what has happened with the 20/20 coins. Dealers will try to get them below face value and make money on the trip to Ottawa as opposed to resell into the collectors market. As it stands today, no dealer will pay anything over face for 69+ (54 as well in many cases) circulated banknotes and most of them will get banked. And there are many more out there.
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Moderator
 United States
54283 Posts |
In the U.S. the "retired" larger bills all carry a premium over face value.
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Pillar of the Community
Canada
2984 Posts |
Quote:
So practically speaking unless the owner of these notes is willing to go to Ottawa to redeem them they will just sit with them collecting dust and depreciating in value.
In fact there will potentially be agents (reader dealers) who will offer 80 cents on the dollar for these "non-collector" notes in these denominations. The reason for that is that they will want to discount them to allow them to go to Ottawa to redeem them.
I highly doubt that people will have to travel to Ottawa to redeem currency. I am sure that government will implement a system where you can turn in demonetized money locally, like banks. |
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Bedrock of the Community
Australia
21788 Posts |
@nss-52:
Is the premium growth rate greater than the inflation compound interest rate, and
is that sufficient to cover not only inflation, but also the depreciating buying power of high face value Notes?
It is the background to this sort of question that makes lower face value Notes more attractive to most banknote collectors.
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Valued Member
Canada
387 Posts |
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@MoneyPenney - I highly doubt that people will have to travel to Ottawa to redeem currency. I am sure that government will implement a system where you can turn in demonetized money locally, like banks. Here is the official language from the Bank of Canada "For now, you can still redeem them at your financial institution, but after a period of time, you will have to send them to the Bank of Canada to redeem their value. Or, you can always decide to keep your notes" Found at https://www.bankofcanada.ca/banknot...-bank-notes/I am not sure how this can be read any differently but to mean that people will have to travel to Ottawa with their notes or somehow make their notes travel to Ottawa. Edited by Paisa
06/09/2018 10:37 pm
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Pillar of the Community
Canada
2984 Posts |
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I am not sure how this can be read any differently but to mean that people will have to travel to Ottawa with their notes or somehow make their notes travel to Ottawa If you read the wording it says Quote:
you will have to send them to the Bank of Canada to redeem their value Sending does not mean physically taking the banknotes to Ottawa. Sending by mail or courier is possible. Also, the wording doe not even mention Ottawa. Its says Bank of Canada which has regional offices in major cities like Toronto, Vancouver, and Calgary. So take it to one of the local offices if need be. The wording says "after a period" whioh is unclear. It could be short as months or years. In UK, they have demonetized coins and currency on a regular basis and people can return them to banks for face value regardless of how old the money. Regardless of what the Bank of Canada says, The Federal government can pass legislation saying banks must take back old currency. |
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Valued Member
Canada
387 Posts |
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The wording says "after a period" whioh is unclear. It could be short as months or years. Absolutely correct. I do hope that it is more like years and not months. However looking at the reasons for this whole thing to happen in Canada it appears that the BoC wants the older notes back sooner rather than later. Quote:
In UK, they have demonetized coins and currency on a regular basis and people can return them to banks for face value regardless of how old the money. It is true that in UK the Bank of England regularly withdraws the older notes when new ones come out. However I encourage readers to take a look at their terms of exchange found here: https://www.bankofengland.co.uk/ban...ld-banknotesFirstly it is very clear on their website that the only entity that has any obligation to exchange those notes is the Bank of England. While it may be possible that regular banks may take in old-banknotes they are under no obligation to do that and I would think the older the notes the more the likelihood that the regular banks will not take them. Secondly there is only one place that the Bank of England will exchange those notes. They can however be mailed or done in person. Thirdly and as I had mentioned in the previous posts there are many rules that apply in exchanging the notes. One of the rules applies when the exchange is happening for someone other than the owner of the money and when the amount is more than £1,000. Finally looking at the terms and conditions (in other words the fine print) can be very discomforting Quote:
From Bank of England -
At our discretion, we may retain your banknotes to carry out additional checks.
You may be required to provide ID for any exchange of any value, or to provide more information or evidence to support the origin of the banknotes.
If for any reason it is not possible to exchange a claim on the same day, we will issue you with a receipt and credit your bank account, typically within ten days. If you require cash, we will make an appointment for you to collect it. Quote:
Regardless of what the Bank of Canada says, The Federal government can pass legislation saying banks must take back old currency. This is true. The fact remains though that the Federal Government through their budget is passing a legislation that will allow the Bank of Canada to only have the notes exchanged at Bank of Canada. So on the spectrum of the possibilities where it may be business as usual (which I think is highly unlikely) or exchanging notes becomes inconvenient, I would say unless there is something definitely collectible it may be better to return it while you can at your local bank. |
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Posted 03/27/2018 8:09 pm
