7 ms·

the real reason why the 500 euro bill has been revoked was that for storing physical money (for banks, in those quantities) would become more expensive in order

the real reason why the 500 euro bill has been revoked was that for storing physical money (for banks, in those quantities) would become more expensive in order for the ECB to lower the interest/deposit rate. next thing will be 200 euro bills revoked, then the base rate can go down to around -1%.

3fe9a03ccd14ca5 7y ago
This really is the endgame in ZIRP. Removing the ability to store cash is the only way to effectively get rates into negative territory.
- chii 7y ago
  Which is why people should be very much against cashless rules.
  - wolfgke 7y ago
    In Germany, they are. As far as I am aware, among all the Euro countries, Germans are particularly fond of cash. Since I work in an area that is related to finance (think in the direction of planning/writing business applications for the banking sector), I seriously very often get asked (in Germany) whether one should cash out all the money from the bank account and store it in a strong private safe to avoid the negative interest of the banks that are in the wind.
    - chii 7y ago
      There's a possibility that Deutchbank is bleeding money and the only way for the govt to bail it out without directly inject money is to go cashless, and let Deutchbank charge negative interest.
dcolkitt 7y ago
I mean, there's an easier way to set a negative interest rate on cash. Periodically select X% of the circulating serial numbers and declare that they're no longer valid currency. In effect this makes X% of cash "burn off" every period, and allows the monetary authority to set any negative effective interest rate that they want. This is by no means an endorsement of negative rates. But if you're going to go down that road, it's a better scheme than just trying to make holding cash too much of a pain in the ass.
- 1337biz 7y ago
  This is too obvious. With the "only criminals use it" argument you have a much easier time convincing people how great the idea is.

3fe9a03ccd14ca5 7y ago

This really is the endgame in ZIRP. Removing the ability to store cash is the only way to effectively get rates into negative territory.

chii 7y ago
Which is why people should be very much against cashless rules.
- wolfgke 7y ago
  In Germany, they are. As far as I am aware, among all the Euro countries, Germans are particularly fond of cash. Since I work in an area that is related to finance (think in the direction of planning/writing business applications for the banking sector), I seriously very often get asked (in Germany) whether one should cash out all the money from the bank account and store it in a strong private safe to avoid the negative interest of the banks that are in the wind.
  - chii 7y ago
    There's a possibility that Deutchbank is bleeding money and the only way for the govt to bail it out without directly inject money is to go cashless, and let Deutchbank charge negative interest.

dcolkitt 7y ago

I mean, there's an easier way to set a negative interest rate on cash. Periodically select X% of the circulating serial numbers and declare that they're no longer valid currency. In effect this makes X% of cash "burn off" every period, and allows the monetary authority to set any negative effective interest rate that they want. This is by no means an endorsement of negative rates. But if you're going to go down that road, it's a better scheme than just trying to make holding cash too much of a pain in the ass.

1337biz 7y ago
This is too obvious. With the "only criminals use it" argument you have a much easier time convincing people how great the idea is.