Swiss Don’t See Big Banknotes Constituting Greater Crime Riskby
Government issues written response to lawmaker’s query
ECB is phasing out 500-euro note because of criminal links
Switzerland said large-denomination bills are not particularly prone to facilitating crime.
“The government is aware of the risk that cash can be misused for criminal purposes, including for terrorism financing,” the Bern-based executive said in a statement published on the parliament’s website. Still, “there is no indication that banknotes of a high denomination pose a particular risk,” it said.
Concern has mounted internationally that big banknotes make life easier for criminals and should therefore be scrapped. While officials in the euro area have announced plans to phase out their most valuable note, the Swiss National Bank has pledged to retain its 1,000-franc ($1,011) bill. In the statement, the government also highlighted the country’s “distinct cash culture.”
The European Central Bank will stop producing its 500-euro ($560) note from the end of 2018, a decision that met with sharp opposition in Germany, the region’s biggest economy. Proponents of the move argue that making wads of cash more cumbersome would render life harder for criminals, terrorists, tax evaders and corrupt officials, while critics say cash itself risks coming under threat.
At the Swiss central bank, which is in charge of deciding on denominations in Switzerland, President Thomas Jordan said last month there were no plans to revise issuance and that cash payments “were still very common.”
Yet the SNB’s steadfastness on big notes has raised eyebrows elsewhere. Former U.S. Treasury Secretary Lawrence Summers earlier this month called on the Swiss to reconsider the 1,000-franc bills, saying they’d “stand out as the hard-currency world’s highest denomination note by a wide margin.”
Swiss anti-money-laundering officials have no knowledge of cases where notes of a large denomination had played a role in illicit transactions, according to the government, which has has all but given up banking secrecy for offshore accounts in the face of pressure from the U.S., Germany and other countries.
Yet with the SNB pursuing a policy of negative interest rates in a bid to lessen pressure on the franc, the government acknowledged that a bill worth 1,000 francs could be an appealing option for anyone trying to avoid the central bank’s charge.
“This denomination does allow value to be stored with the objective of circumventing the banking system,” it said.