Throughout the economic crisis, and even during the most recent Euro-crisis, Europe has been able to depend on one staunch source of euro demand — criminals.
The 500 euro bill is one of the highest value notes around, and despite fluctuations in the euro’s market value, this makes ita favourite of the black market.
Want to carry around $1 million in cash?
Using one-hundred-dollar bills, it will weigh 22 pounds, but using five-hundred-euro bills, it’s only 4.4 pounds.
The high-value bills are increasingly “making the euro the currency of choice for underground and black economies, and for all those who value anonymity in their financial transactions and investments,” wrote Willem Buiter, chief economist at Citigroup, in a recent research report. The business of issuing euro notes, produced at almost zero cost, is “wildly profitable” for the ECB, Mr. Buiter wrote.
Police forces have found the big euro notes in cereal boxes, tires and in hidden compartments in trucks, says Soren Pedersen, spokesman for Europol, the European police agency based in The Hague. “Needless to say, this cash is often linked to the illegal drugs trade, which explains the similarity in methods of concealment that are used.”
A spokeswoman for the ECB declined to comment on who uses the bills.
The quantity of euro notes in existence has growth at an annual rate of 32% since 2002, to about 285 billion euros today. 500-euro bills account for 35% of the value in circulation, despite the fact that most people never see then according to the Wall Street Journal.
One has to wonder what the value of the euro would be right now if not for this black market demand. While the dollar remains the world’s most popular black-market currency, the euro is taking share.