Paper Money

Swiss 1,000-franc note cited by critic as unnecessary

The Swiss National Bank continues to issue a 1,000-franc note, although some journalists question whether legitimate commerce requires a note with that high a denomination.

Images courtesy of the Swiss National Bank.

There may be a chance that Switzerland’s 1,000-franc note, one of the world’s highest denominations, is on the way out, though the Swiss National Bank has made no official declaration.

Although there is no official word, Clare O’Dea, an Irish writer who has lived in Switzerland since 2003 and has covered Swiss politics, culture and business news for the Swiss Broadcasting Corporation, says as much in an opinion piece for the Swiss online journal,

She asks why such a denomination is needed, if the $100 Federal Reserve note is enough for America, the €200 note works in the euro zone, and the British get by with just a Bank of England £50 note. She admits that she has never seen a 1,000-franc note and that such high denominations are not the norm, citing Singapore and Brunei as the only countries not susceptible to high inflation that now issue bank notes with such high face values.

Backing her belief in the 1,000-franc note’s imminent withdrawal, she cites as evidence that such a large denomination is not needed for legitimate business, but that “there are tax evaders, money launderers and other criminals who find the big notes come in very handy.”

O’Dea states that as the reason the European Central Bank discontinued the €500 note in 2019, although the notes retain their legal tender status. She says that the value had become so popular with criminal gangs within the European Union that it was an embarrassment.

Her own statistics, however, confirm that the 1,000-franc note remains popular in Switzerland, where 60% of the value of all francs in circulation is in 1,000-franc notes, which in number equal 9.4% of all physical notes. She neglects to mention that this is small in comparison to $100 bills in the United States, which comprise about 80% of U.S. currency in circulation. Per the Federal Reserve System, as of Dec. 31, 2020, of $2,040.7 billion in circulation, $1,636.8 billion was in hundreds, and the $100 denomination also ranks as the note most printed. Most $100 bills, to be fair, are used in foreign countries.

Supporters of the 1,000-franc note have mentioned that in an era of low and even negative interest rates, the banknote is as good a store of value as a bank account. O’Dea acknowledges that she “has heard” that the notes are convenient for expensive items such as cars and jewelry, and farmers may use them to buy livestock. She has apparently never had the pleasure of visiting a numismatic trade show, where they are seen with regularity.

Instead, she maintains that cash financial practices are becoming dated except for tax evaders, money launderers and other criminals for whom the big notes are handy, and that “cash is no longer king in Switzerland.”

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