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$100 note faces extinction - could NZ's be next?

Friday 2 Dec 2016 12:57 p.m.

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Could the $100 note's days be numbered?

Not yet. But perhaps sooner than many people think, based on what is happening internationally.

The Indian government this month scrapped the 500 and 1000 rupee notes, in what it said was a move designed to stop counterfeiting and the black market economy.

The announcement led to chaotic scenes as people attempted to deposit their notes in bank accounts and post offices.

India is just the latest in a string of countries to scrap some higher value notes.

The European Commission announced earlier this year that it was getting rid of the €500 note. It too is concerned that the note, known as the "Bin Laden," is primarily used by criminals.

British banks are already banned from using the €500 note.

This year the Harvard Kennedy School urged the world's 20 largest economies to stop issuing the largest notes they have in circulation.

The title of its research paper plainly spelt out the reasons why - Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes.

The debate is heading downunder too.

This month analysts at both UBS and HSBC said the Aussie $100 could be removed from circulation, in part because people are increasingly using digital currency.

The UBS report argued that removing large denomination notes in Australia would be good for the economy and good for the banks. The potential impacts could include reduced crime, a larger tax take, fewer cash transactions and a reduction in welfare fraud.

The number of $100 notes in New Zealand rose 184 percent between 2000 and 2015. There are almost $1.9 billion worth out there.

But like many other countries most of them do not appear to be in active circulation, suggesting people are instead storing them.

Despite the calls to remove the notes there are many people who support keeping them.

They argue that scrapping the notes is an attempt by governments and bankers to exert further control over law-abiding citizens.

That argument is one you will increasingly hear in Europe, where savers are facing the prospect of negative interest rates - meaning they would effectively be paying a bank when they deposit their funds. As rates fall savers are more likely to keep their money in a safe or even under the bed, rather than pay the fees.

Supporters of the high value notes say that cash gives people some independence from governments, banks and fees.

Newshub.

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