EU urges ECB to study security risks of 500 euro banknote

EU finance ministers' head urges European Central Bank to reduce security risks of 500 euro banknote

Photo by: AFP
Photo by: AFP

This illustration picture taken on February 12, 2016 in Paris shows several 500 Euro notes displayed in an arrangement

The European Central Bank should make proposals on how to reduce security risks linked to the 500 euro note which can be used for the financing of terrorism, the head of euro zone finance ministers said on Friday.

Almost 30 percent of the more than 1 trillion euros ($1.1 trillion) of cash in circulation last year was hoarded in 500 euro notes, ECB data show.

The banknote is one of the most valuable worldwide, with a value more than five times higher than the largest US equivalent currently in circulation, the $100 bill.

"We are going to ask the ECB to look at cash money and the accessibility of the 500 euro note," Dutch Finance Minister Jeroen Dijsselbloem told reporters ahead of a meeting of EU finance ministers in Brussels.

"There are risks that large notes and large cash amounts can be easily used for terrorism financing," Dijsselbloem, who is a permanent head of euro zone finance ministers, said.

The request for a probe on the 500 euro note comes amid an EU clampdown on all means of payment that may be used to finance terrorist acts. It was triggered by the attacks in Paris last November by Islamic State militants that killed 130 people.

The European Commission, the EU executive arm, proposed last week to increase controls on prepaid payment cards, virtual currencies such as bitcoin and other possible sources of financing for terrorist organisations.

It also warned about the risks of 500 euro notes, mulling possible ceilings on cash payments.

The ECB is in charge of making decisions on the eruo banknotes in circulation.

The 500 euro note has raised concerns also in relation to fraud and corruption. In an interview in January, the top EU anti-fraud official called for the banknote to be withdrawn.

When euro notes and coins began to circulate in 2002, Germany was among the main supporters of having a 500 euro banknote to match the value of its 1,000-mark note, and cater to Germans' traditional preference for cash over electronic money.

TRTWorld, Reuters