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The Elimination Of High-Denomination Bills

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 Posted 12/10/2016  01:08 am  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
Twenties outnumbers fifties
8.1 to 1 in Britain (UK)
5.4 to 1 in USA
3.9 to 1 in Canada
1.7 to 1 in Switzerland

Fifties outnumbers twenties
2.4 to 1 in European Union
3.9 to 1 in Australia

For the sake of the huge expense of processing cash, the USA and Canada should try to get much closer to the equivalent number of $20s and $50s circulating, or at least to equivalent value (2.5 to 1). I don't think the culture will ever change to the point that $50s outnumber $20s like they do in EU or Australia.

Britain may go the other route and completely stop producing the 50 pound note. I don't see Canada stopping producing the CAD$100, but I could see them following the Swedish model and simply circulating a much smaller number. Sweden dropped circulation of their 1000kr banknote by 94% (1000SEK = 143 CAD)
Edited by PacoMartin
12/10/2016 09:28 am
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United States
411 Posts
 Posted 12/10/2016  8:23 pm  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
Articles About Digital Currencies
http://www.independent.co.uk/news/w...6828796.html
Norway's biggest bank DNB calls for the end of cash
http://www.wsj.com/articles/swedens...y-1479296711
Sweden's Central Bank Considers Digital Currency
http://www.digitaltrends.com/cool-t...less-emoney/
Denmark wants to go Cashless by 2016
http://www.newsbtc.com/2015/08/13/e...ning-hearts/
Ecuador's digital currency is winning hearts!
http://www.forbes.com/sites/laurash...6f69c92e1b0c
Canada Has Been Experimenting With A Digital Fiat Currency Called CAD-COIN
https://www.cryptocoinsnews.com/jap...2017-launch/
Japan's Largest Bank to Launch Digital Currency in 2017
According to a report, the Bank of Tokyo-Mitsubishi UFJ Ltd., Japan's largest bank will soon become the world's first global bank to issue its own digital currency.
http://www.cnbc.com/2016/08/24/four...urrency.html
Four of Europe and the U.S.'s biggest banks have joined forces to work on a digital-only cash system, which they hope to launch in two years' time.
http://insidebitcoins.com/news/will...igital/24519
Will the Mexican Peso Go Digital?
http://forklog.net/russian-central-...al-currency/
Russian Central Bank Studies Pros and Cons of National Digital Currency
Edited by PacoMartin
12/11/2016 11:21 am
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 Posted 12/20/2020  03:15 am  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
The history of the 10,000SKK banknote in Sweden.

While the $5,000 and $10,000 circulated in the US, in Sweden they had a 10,000SKK banknote.

At 1945-01-31 this note was worth $2,436 and (3,020 notes) were in circulation. However unlike the US this big banknote was not retired in 1969.

The peak number in circulation (336,870 notes) was on 1986-12-31 when it was worth $1,482 per note. By 1992 there were fewer than 7,000 notes of this huge denomination in circulation.

The note was finally retired in 1993-11-30 and all holders were required to deposit them in banks or keep a very expensive souvenier. At the time it was worth $1,182 per note.

It's strange to think that only 3 decades ago, the cash adverse Swedes had a banknote that was even more valuable than the 1000CHF banknote of Switzerland.

Other timeline events
1984-12-31: the peak circulation of the 100SKK
1985-05-01: the 500SKK banknote was introduced, which diminished demand for the 100SKK banknotes.
2001-12-31: the peak circulation of the 1000SKK.
2007-12-31: the peak banknote circulation of all denominations in Sweden (measured in SKK and not USD).
2008-11-30: the final retirement of the 5SKK and 10SKK banknotes.
Edited by PacoMartin
12/20/2020 1:01 pm
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 Posted 12/21/2020  09:35 am  Show Profile   Bookmark this reply Add captaincoffee to your friends list Get a Link to this Reply
Blast from the past. 4 years and 10 days since the last post in this thread.
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 Posted 12/28/2020  05:06 am  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
I think high denomination banknotes, like high denomination casino chips remains a source of interest, even in the present day when CBDC is a major topic of discussion. Take the 500 banknote. At the end of 2015 there was 307 billion in circulation at which time the ECB announced that they would not be included in the next series of notes. Five years later there are still 204 billion of the 500 banknotes in circulation. Since these large notes are rarely used in transactions, there could still be many of them in circulation in a decade.

The question is what will the US do? Are they going to count on CBDC, or are they going to keep on printing truckloads of $100 bills? Would they consider the $500 again?
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 Posted 12/28/2020  06:05 am  Show Profile   Bookmark this reply Add SteveInTampa to your friends list Get a Link to this Reply
Why in the world would anyone need a $500 note ? Do Americans have that many cash transactions above $500 where that would come in handy ? Personally, I can't think of the last time I spent $500 or more on a cash transaction. High denomination notes fuel nefarious endeavors.
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 Posted 12/28/2020  11:31 am  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
At the end of 2008 the number of $100 bills in circulation caught up to the number of $20 bills. By 2017 the number of $100 bills in circulation passed the number of $1 bills in circulation. The $100 bill primarily circulates in foreign countries where it is used as a "store of value" and also for nefarious endeavors. By 2038 when a new series of $100 banknotes is scheduled to be issued, there are going to be a serious number of $100 bills in circulation.

While many people believe that Central Bank Digital Currency (CBDC) will replace banknotes, the initial forays into CBDC (like in Bahamas and South Korea) have limited accounts to ~$500. There is a lot of concern about allowing accounts of much higher value as having a serious effect on the money supply.

While it is true that many Americans never handle a banknote worth more than $20, replacing all of those $100 bills around the world in 2038 may prove a massive undertaking. While the $500 bill was retired in 1969, a $100 banknote had the buying power of $500 1969 dollars by the year 2003, and over $700 today. Some people feel that the largest denomination note issued by the FED should be updated in keeping with half a century of inflation.
Edited by PacoMartin
12/28/2020 11:38 am
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 Posted 12/29/2020  5:04 pm  Show Profile   Bookmark this reply Add jbuck to your friends list Get a Link to this Reply

Quote:
Why in the world would anyone need a $500 note ? Do Americans have that many cash transactions above $500 where that would come in handy ? Personally, I can't think of the last time I spent $500 or more on a cash transaction. High denomination notes fuel nefarious endeavors.
I have to agree. I dislike having anything larger than a $20 and I prefer to not have more than a few at a time.
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 Posted 12/30/2020  11:57 pm  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
The Bank for International Settlement reports that the US is at the end of 2019 is circulating (per person):
28.9 $20 banknotes
6.3 $10 banknotes
9.6 $5 banknotes
38.5 $1 banknotes
For a total of $729 + $145 in coins

For many people that is all the cash they care about or need as they make all major purchases with credit cards. I understand that completely as I am one of those people.

But that does not satisfy the worldwide demand for US banknotes. At the end of 2019 circulating $100 banknotes outnumber $20 banknotes by 49.5%. I am talking about number of notes, not value.

====================
It should be noted that initial electronic currency (like TMoney in South Korea introduced in 2004) restricts the amount of money deposited in Tmoney card to not exceed 500,000KRW ~$460.

The Bahamian Sand Dollar (a central bank digital currency) introduced in October has a personal account limited to $500

As digital currency becomes more and more widespread, it will be interesting if the US will take aim at the small banknotes by limiting accounts to $500 or less, or if it will adress the $100 banknotes as well.
Edited by PacoMartin
12/31/2020 2:30 pm
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 Posted 01/05/2021  11:42 pm  Show Profile   Check yellow88's eBay Listings Bookmark this reply Add yellow88 to your friends list Get a Link to this Reply
I'm ballparking but currently something like 3-5% of legal tender exists in the physical form i.e. coins and banknotes. The rest exists electronically as a series of 1's and 0's on computers and other digital machines.

The majority of the aforementioned 3-5% resides outside of the United States mostly in foreign countries whose domestic legal tender is experiencing weakness or other strife. So the much stronger USD acts as a prudent alternative legal tender for manifold reasons in said countries.

Wells Fargo paid one billion dollars in interest to it's retail depositors in 2018. In the same year Wells Fargo paid forty billion dollars in fines most of which went to the regulating entities, court judgements, and agencies of or in favor of the Fed gov.

In regards to large denomination notes. The most oft cited reason for the demonization of large denomination notes is that they aid, abet, or facilitate criminal activity. Thus they should be abolished. This sole rational has now become dogma. It has become dogma not because of empirical evidence, logic, or facts but simply through repetition and legislation.

The dogma is a false one. Yes, there are a few outliers and exceptions but the exceptions are not substantive.

Make two columns on a sheet of paper.

In the first column list all of the reasons (most of which are 100% legal, quite practical, logical and beneficial) FOR large denominations notes.

In the second column do like likewise listing reasons AGAINST large denomination notes.

When done compare the two columns.


Edited by yellow88
01/05/2021 11:44 pm
Bedrock of the Community
Australia
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 Posted 01/06/2021  01:25 am  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
I have never had a credit card
Why?
With cash in hand budgeting, I must have saved $squillions since credit cards were introduced. I have never been short of money in my life.

For my form of personal weekly and annual budgeting, high denomination notes are essential.

Everything in my life, (except my house), including payment of utility bills and purchase of cars, has been paid in notes.

What we all need is digital currency banknotes
Pillar of the Community
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 Posted 01/06/2021  04:07 am  Show Profile   Check yellow88's eBay Listings Bookmark this reply Add yellow88 to your friends list Get a Link to this Reply
In furtherance of the excellent examples sel_691 presented I shall attempt to present another.

Large denomination notes can act as a facilitator and motivator of creating an individual's personal savings. Let's say an individual sets a goal to save $1000 every three months. Over those three months that individual sets aside the change they receive back from cashiers, sets aside a percentage of the money they withdrawal from the ATM, sets aside the remaining cash in their wallet on their next payday, etc. The individual may forgo eating lunch out during the work week and instead pack their own lunch every other day. Also, the individual may forgo making a lot of little impulse purchases that bring VERY temporary pleasure like Starbucks, an iTunes download, a half dozen donuts, etc.

Doing the above requires discipline and consistency both of which are positive attributes for an individual to possess when it comes to saving money. Done long enough they become habit. Also, they may instill financial responsibility and increase financial awareness in the individual.

After three months the individual "adds up" and combines all the "little savings" then goes to the bank and exchanges it for a single tangible $1000 note. In addition there are significant non-tangible benefits received by the individual. The individual receives the positive personal psychological rewards that are intrinsic to successfully achieving a long term personal goal.

Lastly is maintaining and increasing individual savings. Here again that $1000 note comes into play as a significant factor.

Why? Let's say the new iPhone comes out or BestBuy just got in the latest TV with 8 billion pixels per sq. millimeter or the latest Calloway drivers that "guarantee an additional 20 meters on your tee shot" are introduced, etc. During the decision making part of the purchasing process the individual now has a new factor to weigh in. The $1000 note.

The $1000 note acts as a tangible reward for the self-sacrifice, the three months of effort, the self-discipline, and most importantly a tangible reminder of how great the feeling is setting, working towards, and ultimately achieving that individual's personal goal i.e. the psychological benefits.
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 Posted 01/06/2021  1:51 pm  Show Profile   Bookmark this reply Add jbuck to your friends list Get a Link to this Reply
Rules prevent me from posting said list for and against large notes, but I assure you there is more harm than good.

And there is also bias.

If the reason is dogmatic, as you say, then apologists will find a way to create lists to sell their case.

In other words, that exercise really proves nothing. Sorry.

Also, that tangible reward is losing value the longer you hold it because of inflation, versus putting that money in an interest bearing account... which are also having a difficult time keeping ahead of inflation these days.
Bedrock of the Community
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 Posted 01/06/2021  6:01 pm  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
Cash budgeting works best in a low inflation environment.

In a high inflation environment, pay your mortgage or other debts out early to avoid paying interest, which is always higher than the inflation rate.
Paying off interest early is in reality a tax free investment, with a guaranteed rate of return.
In this type of situation, only budget the minimum amount of cash that you anticipate that you will need.

High denomination notes are very useful and convenient in both of the above scenarios.
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 Posted 01/07/2021  05:15 am  Show Profile   Bookmark this reply Add PacoMartin to your friends list Get a Link to this Reply
I'm ballparking but currently something like 3-5% of legal tender exists in the physical form i.e. coins and banknotes. The rest exists electronically as a series of 1's and 0's on computers and other digital machines. - yellow88

I think that 3-5% applies only to some countries like UK, Canada, Australia, and New Zealand which traditionally are low cash societies. That used to be true of the US, decades ago, but not in the last 30 years since the worldwide use of the $100 bill helps offset the huge trade deficits.

Korea is funny because until about a decade ago they were a low cash society with their largest banknote worth less than $10. But that was motivated more by their fear of North Korean counterfeiting operations.

Japan, Switzerland, Germany, Belgium have always been high cash societies. Oddly enough Sweden was a high cash economy up until about 30 years. Sweden had been moving towards a low cash society. The initial step is always to get rid of the hand written check.

Banknotes and Coins as a Percent of GDP at the end of 2019 (Bank for International Settlements)
1.3% Sweden
3.3% South Africa
3.4% United Kingdom
3.6% Turkey
3.9% Brazil
4.3% Canada
4.4% Australia
4.6% Argentina
5.0% Indonesia
...
6.6% Korea
7.1% Mexico
7.3% Saudi Arabia
8.3% China
8.3% United States
9.6% Russia
10.3% Singapore
11.1% Euro area
12.0% India
12.1% Switzerland
18.5% Hong Kong
21.3% Japan
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