The demand for high euro banknote denominations: Where does it come from? Henk Esselink European...
10
The demand for high euro banknote denominations: Where does it come from? Henk Esselink European Serious Organised Crime Conference Liverpool, 5 March 2008
-
Upload
amos-bradley -
Category
Documents
-
view
216 -
download
0
Transcript of The demand for high euro banknote denominations: Where does it come from? Henk Esselink European...
The demand for high euro banknote denominations:Where does it come from?
Henk Esselink
European Serious Organised Crime ConferenceLiverpool, 5 March 2008
Observed and forecasted development euro banknote circulation from 1991 to end-2007
200
250
300
350
400
450
500
550
600
650
91 93 95 97 99 01 03 05 07
200
250
300
350
400
450
500
550
600
650
observed currency in circulation (excl. vault cash)
forecast currency in circulation (excl. vault cash)*
Value in EUR billions
* Forecast from 2000 Q4 onw ards using the model as presented in Fischer, B., Köhler, P., Seitz, F, 2004, The Demand for euro area currencies: Past, present and future, ECB Working Paper No. 330.
Circulation development of the denominations of the legacy currencies and euro denominations
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
€ 50 € 100 € 200 € 500
Value in EUR millions
Facts on high denomination banknotes of legacy and other currencies
• In BE, DE, IT, LU, NL, AT legacy banknotes with a value > EUR 200 were in circulation
• Share in circulation value ranged from 35% to 50% (IT: 15%)
• CHF 1000 (≈EUR 622) share in circulation of 56%
• USD 100 share in circulation of 70%
€500 €200 €100 €50 €20-€5
Growth value in 2007 7.90% 1.90% 8.30% 8.90% 5.04%
Share in volume end-2007 3.7% 1.3% 10.0% 36.7% 48.3%
Share in value end- 2007 33.4% 4.6% 17.9% 32.8% 11.2%
DEM 1000 DEM 500 DEM 200 DEM 100 DEM 50 - DEM 10
Share in value 34.1% 10.1% 2.7% 38.9% 14.2%
Issued and returned €500 banknotes by National Central Banks
Issued €500 between January 2002 and December 2007(value in EUR billions; total value: EUR 1,411 billion)
NL 51.0 4%
LU 70.3 5%
IT 122.3 9%
ES 173.3 12%
DE 669.8 46%
BE 68.8 5%
AT 121.4 9%
Other 35.3 3%
FR 99.2 7%
Returned €500 between January 2002 and December 2007(value in EUR billions; total value: EUR 958 billion)
DE 484.0 51%
BE 87.7 9%
Other 28.4 3%AT 84.4
9%LU 5.6
1%
IT 79.2 8%
ES 59.8 6%
FR 91.0 9%
NL 38.2 4%
Net-issued January 2002 until December 2007(Value in EUR billions)
BE DE ES FR IT LU NL AT Other Total€500 -18.9 185.8 113.5 8.2 43.1 64.7 12.8 37.0 6.9 453.2
Findings on high denomination banknotes
• Share of high euro denominations in circulation is not unusual
• € 500 mainly issued by the central banks of Germany, Spain, Italy and Austria
• The largest net-outflow of €500 is from Germany, Spain and Luxembourg
• An average €500 banknote returns only once every two years to a central bank (€50: 2.5 times per year; €10: 5 times per year)
Non-resident demand: sales and purchases of euro banknotes by wholesale banks
PurchasesJanuary-October 2007 €37 billion
(2006: € 44 billion)
Eastern Europe42%
Asia & Australia24%
EU Non-euro area12%
Middle East9%
Middle & South America
2%
North America3%
Africa5%
Rest of Europe3%
Sales January-October 2007: €47 billion
(2006: €43 billion)
Eastern Europe25%
EU Non-euro area32%
Asia & Australia7%
Rest of Europe26%
Middle East4%
North America2%
Africa3%
Middle & South America
1%
What do we know about the use of €500?
• Between 10% and 20% of euro banknotes circulate outside the euro area (USD around 60% abroad)
• Many wholesale banks report that around 70% of the value of the sales is in €500
• €500 used for several legal reasons; especially hoarding and transactions outside the euro area
• The use of cash and the €500 in the grey and underground economy is difficult to estimate
• Tracing €500 banknotes via serial numbers is very difficult
• The ECB is currently conducting a study on the use of the €500 and €200
Some points for discussion
• Which banknotes are mostly found at drug seizures or when criminal gangs are rounded up?
• Is there any evidence that euro banknotes are increasingly being used by criminals?
• Does the easier handling of the €500 and €200 offset the higher suspicion related to the use of these notes?
• Does the availability of €500 banknotes facilitate criminals’ work?
• Can data on cash flows help to understand the origin of criminal proceeds?
Questions?
Tel: +49 69 1344 8823
