On 4 May 2016, the Governing Council of the European Central Bank (ECB) decided to permanently end production of the 500 euro note - the denomination with the highest face value in the Eurozone. Issue of this denomination will be stopped in late 2018. On that date, the Eurozone central banks will cease putting 500 euro notes into circulation. The other denominations, from 5 euro to 200 euro, will remain.
1. Why stop production and issue of the €500 note?
This decision is part of strengthening money laundering and terrorism financing prevention. It addresses concerns about the illegal activities that the €500 note could facilitate.
2. When will the issue of this denomination stop?
The end of issue of the €500 note will take effect when the "Europe" series of €100 and €200 denominations is introduced, in late 2018. To replace a €500 note, at least three notes will be required – two €200 notes and one €100 note. Sufficient quantities of those denominations will therefore need to be available, and production schedules for the "Europe" series of those notes will be defined accordingly.
3. What is the importance of the €500 note in France?
Although in value terms the €500 note accounts for 28.3% of the notes issued by the Eurosystem in 2015, this denomination is very little used in France, like the €200 note, due to French payment habits (preference for €5 to €50 denominations) and restrictions on cash payments (for French residents, the 1000 euro ceiling for payment of transactions with professionals).
Thus, since the euro was introduced in 2002, the Bank of France has received more €500 at its counters than it has issued: at the end of 2015, the difference amounted to -5.4 billion euro, resulting in particular from flows connected with tourist spending (vs. -1.7 billion euro for the €200 note). So this disappearance is causing little reaction, conversely to in Germany, for specific reasons (Germany had a 1000 mark note before the introduction of the euro, and at present there are no limits to cash payments there).
4. Until what date can €500 notes be used?
And will they still have value afterwards? Will people be able to ‘exchange’ them for other denominations at their banks?
€500 notes will continue to be legal tender and it is important that they retain their value over time. Therefore, even after the issue of this denomination is stopped in late 2018, they will be able to be used, as now, to settle transactions or for hoarding.
Moreover, like all notes of the first range of euro notes, they will be exchangeable at Bank of France branches or at the Eurozone’s other national central banks, for an unlimited period.
By late 2018, the Eurosystem will have produced the required volume of notes to replace €500 notes and thus respond to public demand for high denomination notes (€50, €100 and €200 notes) used primarily for hoarding.
5. Is this abolition aimed at reducing the use of cash?
The Eurosystem, including the Bank of France, has no desire to abolish cash. The banknote is an easy-to-use, reliable method of payment which is part of consumers’ free choice, as for the payment means they wish to use.
