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Euro Coins Production

Dáil Éireann Debate, Tuesday - 17 December 2013

Tuesday, 17 December 2013

Questions (150, 151, 152, 153, 154)

Kevin Humphreys

Question:

150. Deputy Kevin Humphreys asked the Minister for Finance his plans to discuss with his colleagues in Europe the phasing out of the €500 denomination note due to its popularity among those associated with criminal activity; and if he will make a statement on the matter. [54031/13]

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Kevin Humphreys

Question:

151. Deputy Kevin Humphreys asked the Minister for Finance if there has been any analysis with his Department, National Treasury Management Agency or Central Bank regarding the Merrill Lynch suggestion that the Euro Group abandon the €500 denomination note, give owners a month to exchange them, with justification for sums of more than €10,000, and then use the proceeds from the rest of those left in circulation to fund the recapitalisation of eurozone banks; and if he will make a statement on the matter. [54032/13]

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Kevin Humphreys

Question:

152. Deputy Kevin Humphreys asked the Minister for Finance if he or anyone in his Department, the National Treasury Management Agency or the Central Bank raised the Merrill Lynch suggestion that the Euro Group abandon the €500 denomination note, give owners a month to exchange them for other lower denomination notes, with justification for sums of more than €10,000, and then use the proceeds from the rest of those left in circulation to fund the recapitalisation of eurozone banks, with officials in the ECB, ESM, eurozone countries or Commission officials; and if he will make a statement on the matter. [54033/13]

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Kevin Humphreys

Question:

153. Deputy Kevin Humphreys asked the Minister for Finance if he is concerned that €327 billion of the €918 billion of euro notes in circulation are €500 notes; and that the vast majority of these are used for criminal activity due to their convenience; if he will raise this issue in Europe; and if he will make a statement on the matter. [54034/13]

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Kevin Humphreys

Question:

154. Deputy Kevin Humphreys asked the Minister for Finance the number of €500 notes that have been issued by the Irish Central Bank; the number currently in circulation here; if Irish banks handle these notes; if he is concerned that if they do they are more than likely the result of criminal activity; if he has any plans to phase out their use; and if he will make a statement on the matter. [54035/13]

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Written answers

I propose to take Questions Nos. 150 and 154, inclusive, together.

Under the Treaty on European Union, the ECB has the exclusive right to authorise the issue of euro banknotes.

Earlier this year, a number of MEPs wrote to the President of the ECB requesting his support for the withdrawal of the €500 banknote. The President's reply to the MEPs noted that the reasons that originally led to the decision to have €500 banknotes in circulation were still valid. Before the changeover to euro cash in January 2002, six of the euro area countries – Austria, Belgium, Germany, Italy, Luxembourg and the Netherlands – had national banknotes worth between €200 and €500. At the end of June 2013, the share of €200 and €500 banknotes in total circulation was 36%.

Mr Draghi's reply to the MEPs also explained that the share of the total circulation value of the high denomination euro banknotes has been quite stable since 2009; it is not much different from the recorded shares of some of the highest denominations of the former currencies of the countries mentioned above.

The President of the ECB also noted that ECB studies indicated that only about 15% of high-denomination banknotes are used for transaction purposes. Consequently, it is not likely that a large share of the €500 (and €200) banknotes in circulation is being used for criminal transactions. Neither does it seem likely that withdrawing the €500 banknote from circulation would contribute to reducing such activities. Whilst it is impossible to know precisely to what extent and for what reasons people are hoarding banknotes, there is evidence that the €500 banknotes fulfil a role in the provision of cash to the public in times of high uncertainty.

Since the introduction of the euro in 2002 the Central Bank of Ireland has issued in excess of 1million €500 banknotes.

As euro banknotes circulate throughout the Eurozone, it is Net Issuance, rather than circulation, that is calculated on a national level. Net Issuance is a calculation of notes delivered less notes destroyed, less stocks. It does not take into account factors such as migration of notes within the eurozone. The Net Issuance of €500 banknotes in Ireland is 112,278 banknotes, with a value of

€56,139,000 as at 12 December 2013.

The Deputy also refers to a suggestion by Merrill Lynch that the €500 banknote be discontinued with the proceeds being used to recapitialise Eurozone banks. This suggestion has not been examined by the Department of Finance, the Central Bank or the National Treasury Management Agency; nor has it been raised with the institutions referred to by the Deputy.

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