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THE END OF THE 500 EURO NOTE 1/4

What denominations of notes are there in your currency? Has there ever been another
currency used in your country, and if so, why was it changed and what were the
denominations in it?
Harvard economist Kenneth Rogoff argues for getting rid of as much paper money as
possible. Why? Read the first part of the the article and find out.

Quartz February 2019

THE END OF THE book, The Curse of Cash,


outlines the case for getting
€ 500 NOTE rid of as much paper money
For lovers of large- as possible, and larger notes
denomination paper money, in particular, because of the
Harvard economist Kenneth role cash plays in money
Rogoff is enemy No. 1. His laundering and tax evasion.

Do you think these are good enough reasons for getting rid of paper money?
Discuss these questions and then read the next part of the article and check your ideas:
1 When did the ECB stop printing €500 notes?
2 What is the €500 note’s nickname?
3 Why do you think Rogoff says policymakers are reluctant to give up on cash?

The European Central Bank terrorism (but rarely being the money that is created is
agrees with these concerns, seen in public). The ECB says worth more than it costs to
but has moved slowly to the mega-note will always produce) when they print
address them. This month, be accepted within the euro money, giving them a revenue
most of the euro zone’s system. source that arguably helps
national central banks Rogoff has been agitating preserve their independence.
stopped recirculating the for these kinds of changes for But as Rogoff sees it,
€500 note (worth about some 20 years. The former governments likely lose far
$570 at the moment). chief economist at the IMF more money through cash-
Two holdouts, Austria and says the gradual phasing out facilitated tax evasion and
Germany, will phase out the of the €500 note is “a small crime than they make by
common currency’s highest- but constructive step, and printing cash. He says central
denomination note in April. a tacit admission that large banks could find other ways
The ECB made the notes are disproportionately to come up with revenue.
announcement almost three used for tax evasion and
years ago, and hasn’t printed criminal activities.” He has
fresh €500 banknotes since long argued that the main
2014, but its national banks reason policymakers are
have continued accepting and reluctant to give up on cash is
redistributing the infamous because they make so much
note, sometimes dubbed the money from it.
“Bin Laden” for its supposed Central banks generate
role in helping finance seigniorage (revenue when
THE END OF THE 500 EURO NOTE 2/4

Have you ever used a €500 banknote? Will you miss them? What other ways could
central banks come up with revenue?
What legitimate reasons are there to keep physical cash around? Read the next part of
the article and compare your ideas to the journalist’s.

substitutes are more society were to move away


traceable and susceptible from paper money too
to government (as well as quickly, the elderly, poor, and
corporate) surveillance. Some homeless are vulnerable to
people find it easier to budget being left behind. That’s why
their money when they use Rogoff says he advocates
cash. Others simply don’t moving away from large
There are, of course, legitimate trust banks, fear deflation, banknotes first, rather than
reasons to keep physical or want to guard against quickly eliminating paper
cash around. Its electronic negative interest rates. If money altogether.

Could you survive without paper money?


Say whether you think these statements are true or false and then read the next
part of the article and check your ideas:
The euro zone’s €500 notes are so valuable to the criminal underworld that they’ve
exchanged hands above face value.
€500 notes account for a quarter of the value of all banknotes in circulation.
Large-value notes are especially attractive to criminals because they make it easier
to hide and transport large sums of money.
Getting rid of paper money is more useful for preventing terror attacks than it is for
snuffing out tax evasion.
The funding needs for ISIS are huge compared with those of a major drug cartel.

The euro zone’s €500 notes large sums of money. to finance terrorism appears
are so valuable to the “Although not all use of relatively small. In his book,
criminal underworld that cash is criminal, all criminals Rogoff suggests that the
they’ve exchanged hands use cash at some stage in the funding needs for ISIS,
above face value, according money laundering process,” one of the best-financed
to a Europol report in 2015. Europol said. terrorist organizations,
The EU’s law enforcement Cash use in terrorism are comparatively meager
agency pointed out that the finance is likely one of the main compared with those of a
banknotes weren’t often reasons that policymakers major drug cartel.
used for payments, yet still have cracked down on large
accounted for one-third of bills. That said, getting rid of
the value of all banknotes in paper money is probably less
circulation. Large-value notes useful for preventing attacks
are especially attractive to than it is for snuffing out tax
criminals because they make evasion. That’s because the
it easier to hide and transport amount of money needed

Which is the highest denomination note that you use on a regular basis? Would its
disappearance be a problem for you?
THE END OF THE 500 EURO NOTE 3/4

How could the elimination of paper money help central banks deal with the next
economic shock? Read the next part of the report and check your ideas.

Central banks have one more them impose negative interest


reason to be wary of paper rates if needed, to jumpstart
money: interest rates have the economy during a major
declined around the world, downturn more effectively.
giving policymakers less scope (Depositors pay for banks to
to reduce borrowing costs the hold their money when rates
next time there’s an economic go negative, an incentive to
shock. The widespread use of spend or invest the funds
electronic money could help instead.)

What would you do if your bank applied a negative interest rate to your savings?

What do you think Rogoff says will be the final nail in the coffin of large denomination
notes? Read the final part of the article and check your ideas.

Even without official decrees, trend reaches an inflection banks to hide behind the fig
people in many parts of the point, Rogoff says central leaf of pointing to the modest
world are giving up on cash on banks will be under even legal demand for large bills.”
their own. Apps make it easy more pressure to get rid of
to swap money with friends, large denominations like the
and contactless payments— €500 note.
which are expected to roll out “There will eventually be
widely in the US this year—are a tipping point,” he wrote in
faster for small transactions an email, “where it no longer
than paper money. When that becomes possible for central

Do you use money apps or contactless payments? Do you agree with Rogoff about the
pressure on central banks to get rid of large denomination notes?
Make a list of words in the article that are connected to money and banking.

Discuss these questions with a partner and then make questions of your own with the
words above to ask other members of the class:
●What is the highest denomination note in the US?
●How much paper money do you usually carry around with you?
●How is money laundering most commonly done?
●Which people do you usually pay in cash?
●Where is your country’s central bank and does it have a special name?
●Is seigniorage a large source of income for your country’s central bank?
●What was the last bank transaction you made?
●Which bill from your country has the best design?
THE END OF THE 500 EURO NOTE 4/4

What does the highlighted expression in this extract from the article mean?

Guardian January 2019

...The Curse of Cash, outlines the case for getting rid of as much of paper money as possible...

There are a number of expressions with get in English. What do you think these mean?

__ get someone’s drift __ get a kick out of something

__ get a feel for __ get one’s bearings

__ get cracking __ get one’s act together


get one’s bearings
__ get the nod __ get wind of

Now match them to the definitions below.


1 figure out one’s position or situation relative to one’s surroundings
2 enjoy something greatly
3 begin to understand how to do something well
4 find out about
5 become organised
6 be chosen
7 begin moving or working; start
8 understand what someone has said

Complete these sentences with the expressions studied:


1 Let’s get _________________________ these boxes, they’ve been in the store room for
ages and we never use them.
2 I hope I explained it clearly. I’m not sure everyone got __
___________________.
3 If he wants to avoid being sacked, he needs to get _____
_________________________.
4 The young striker got ________________________ for the
final and will be in the starting eleven.
5 As the founder of the business, I really get __________________________ seeing young
people work there way up in the company.
6 Lots of people got __________________ the party on social media and not everyone
could fit in the house.
7 We have a lot to do today, so let’s get ________________________.
8 I haven’t been here for a long time, so it is going to take me a couple of days before
I get _________________________.
9 You may find it difficult at first, but you will get ___________________ it very quickly.
THE END OF THE 500 EURO NOTE
teacher’s notes: 1 page student pages: 4 level: B1+ week of: 04.02.19

Make a list of words in the article that are connected to money and banking.
Make sure the students have these words in their list:
denomination paper money note cash money laundering
central bank recirculate currency banknote seigniorage
depositor funds transaction bill
Discuss these questions with a partner and then make questions of your own with the
words above to ask other members of the class,
What is the highest denomination note in the US?
FYI: The highest value of denomination currently in production is the $100 bill, but
in decades past, the Federal Reserve has issued $1,000, $5,000, $10,000 and even
$100,000 bills.

What does the highlighted expression in this extract from the article mean?
get rid of = eliminate or discard

Now match them to the definitions below.


8 get someone’s drift 2 get a kick out of something
3 get a feel for 1 get one’s bearings
7 get cracking 5 get one’s act together
6 get the nod 4 get wind of

Complete these sentences with the expressions studied:


1 rid of
2 my drift
3 his act together
4 the nod
5 a kick out of
6 wind of
7 cracking
8 my bearings
9 a feel for