An unloved banknote: is the £50 in danger?

A harbinger for the death of cash — and a resulting loss of liberty

https://www.ft.com/content/0944a7f2-c128-11e6-81c2-f57d90f6741a

The author talks about the distrust raised by the £50 banknote in the UK. Peter Sands, the former chief executive of Standard Chartered bank, suggested last February that the main use of the 50 was illicit:
“Ask people in the United Kingdom when they last used a £50 note, the highest sterling denomination, and the most common answer is to pay a builder or plumber,” he said in a paper calling for its abolition. “The incentive is tax evasion.”

Despite the author's indication that the £50 is difficult to get, the Bank of England indicates a large jump in circulation of the banknote (almost 50 million new notes since last year). The count of circulating banknotes is end of February of stated year
2007 : 134 million
2008 : 151 million
2009 : 174 million
2010 : 185 million
2011 : 199 million with new series first issued 2 November 2011
2012 : 198 million
2013 : 207 million
2014 : 221 million
2015 : 236 million
2016 : 263 million
2017 : 312 million

The abolition of the £50 denomination would leave the highest value banknote in UK worth £20 = US$25.08 = 469 Mexican pesos . So the highest value British note would be worth less than the Mexican 500 peso banknote which makes up the bulk of the Mexican cash supply.

Fyodor Dostoyevsky said in 1861, “Money is coined liberty.” It has been said that “People are sleepwalking into this” referring to the possible abolition of cash.

Quote:

Despite the author's indication that the £50 is difficult to get,

So if they're hard to get, and nobody uses
them, where are all the ones in circulation
and what are they used for.

The £50 banknote was re-introduced on 20 March 1981 since the old ones were demonetized after WWII because of concerns about Nazi counterfeiting by the Jews interred in Sachsenhausen concentration camp under SS Major Bernhard Krüger.

The exchange rate was much higher back then, so at times the £50 was worth more than the US$100
1980 $2.33 (end of year)
1981 $2.02 (end of year)

But the USD zoomed in value under Ronald Reagan so that the £1 was almost at parity with $1.

Finally, the governments of France, West Germany, Japan, the United States, and the United Kingdom, agreed to depreciate the U.S. dollar in relation to the Japanese yen and German Deutsche Mark and British pound by intervening in currency markets. The five governments signed the accord on September 22, 1985 at the Plaza Hotel in New York City so it has always been known as the "Plaza Accord".

Quote: Evenbob

So if they're hard to get, and nobody uses them, where are all the ones in circulation and what are they used for.

The £50 was reintroduced almost 11 years after the £20 and 17 years after the £10. Older British people were used to only using the £1, £2, and the £5 so the £50 was almost always distrusted by the public. Many people only assume that it used for tax evasion.

Every study of currency always concludes that they can't trace legitimate uses for the largest denomination. They are always presumed to be used to get around laws.

The value of federal reserve notes jumped from $23 billion after WWII, to $47.6 billion in 1970 to $79 billion by the end of the 1976.

The first such article in the USA appeared a few years after Nixon cancelled the direct international convertibility of the United States dollar to gold in August 1971. The article was by James Henry (a Danforth Fellow in economics and law at Harvard University) and it was entitled "Calling in the Big Bills" and appeared in The Washington Monthly, May 1976, pp. 26-33. It was subtitled "A monetary detective finds a painless way to catch the tax evaders and cripple organized crime".

https://en.wikipedia.org/wiki/Nixon_shock

Quote:

Every study of currency always concludes that they can't trace legitimate uses for the largest denomination. They are always presumed to be used to get around laws.

So the Brits keep putting more and more
of these bills into circulation to help the
criminal section on the population? That's
really nice of them, don't you think?

Quote: Pacomartin

The £50 banknote was re-introduced on 20 March 1981 since the old ones were demonetized after WWII because of concerns about Nazi counterfeiting by the Jews interred in Sachsenhausen concentration camp under SS Major Bernhard Krüger.


Every study of currency always concludes that they can't trace legitimate uses for the largest denomination.
They are always presumed to be used to get around laws.

The value of federal reserve notes jumped from $23 billion after WWII, to $47.6 billion in 1970 to $79 billion by the end of the 1976.

and it was entitled "Calling in the Big Bills" and appeared in The Washington Monthly, May 1976, pp. 26-33. It was subtitled "A monetary detective finds a painless way to catch the tax evaders and cripple organized crime".

Is there a difference between Nazi counterfeiting and North Korean/Russian counterfeiting?

Always presumed to get around laws? Well, even politicians need to pay immigrant nannies and maids. So how about considering some such uses ACCEPTABLE?

"The value of federal".... is this similar to a "penny" slot machine. Nominal value ? Or total amount of notes.. but hardly 'value'.

Painless way to catch tax evaders, cripple organized crime and restrain the entire populace.
WHAT are acceptable alternatives? Bottles of Scotch? Boxes of Tide? How do you get a single mother on welfare to be a maid? You can't use checks or credit cards, cash only. If you remove the cash? What becomes the store of value and medium of exchange? Gift Cards???? Are gift cards going to become like airplane "miles"?

Quote: Fleastiff

Always presumed to get around laws? Well, even politicians need to pay immigrant nannies and maids. So how about considering some such uses ACCEPTABLE?

I think that the British politicians feel that if you are paying for a few hours of work in cash that the £20 is an acceptable denomination, and you don't need a £50. If the cash payment is so large that you need a large number of £20 banknotes, then you should be paying via another means that is trackable. Since 1969 in the USA the amount of cash payment that you can make anonymously has been set at $10,000. For payments above that amount, you are obligated to fill out a form.

Here is the cover story of the 1976 magazine that had the story about removing the $100 bill. In 1976 the $100 was still circulating at less than one banknote per capita, so most people never saw them. The phrase "All about the Benjamins" would not be invented for years.


The decision by the ECB not to include the €500 note in the new banknote series currently being produced only means that they have ordered a large number of €200 banknotes on order. They are so far not really trying to reduce the cash supply. But about half of the Eurozone banknotes are the denomination €50 ~ £43.

I recently read Time magazine article about how the USA's power supply is becoming smarter in response to the great blackout of 2003 in the USA. But the Ukraine has recently come under cyberattacks which were only overcome because Ukraine still has equipment from the 1960's which enabled them to manually restart the grid. If the USA falls prey to a similar successful attack, that kind of equipment frequently doesn't exist anymore.

It is one of those scenarios (along with solar flares) where the entirely electronic payment system could fail for an extended period of time. Also the Swedish system virtually requires every person in the country to have a bank account, as cash payments dwindle.

Sweden is circulating less than six banknotes per capita with value above US$25 (and very few with lower denominations). They will probably be in a lot of trouble in a few days if their electronic payment system is compromised.

Electronic payment systems are compromised after hurricanes... telephone and electricity required to run the pumps and process the payment cards. So larger gas stations are required to have generators. Commerce would not grind to a halt if electronic funds systems go down but it would slow to a crawl and be limited to low amounts of money.

Quote: Fleastiff

Commerce would not grind to a halt if electronic funds systems go down but it would slow to a crawl and be limited to low amounts of money.

In the USA there are 40 banknotes circulating per capita above $25 in value and 42 banknotes per capita between $3 and $24. Even if ATM's fail, people can go to a teller. Cash is readily available at Walmart or supermarkets. Yes it would slow down, but not come to a halt.

I am saying Sweden with such a limited number of banknotes would have a great deal of trouble. The current count of "new" banknotes per capita is under 11 not counting the smallest denomination (which is a coin in other Scandinavian countries). Only the "new" banknotes will be valid in three months, and a few more are expected to be put in circulation by then, but it is highly unlikely the count will go higher than 13-14.

per capita : Swedish denomination: equivalent value in USD
5.15 : 20 kr : $2.28
2.00 : 50 kr : $5.69
2.10 : 100 kr : $11.39
3.30 : 200 kr : $22.77
3.00 : 500 kr : $56.93
0.34 : 1,000 kr : $113.86
15.88 total banknotes

Almost all banks in Sweden do not have cash drawers at teller stands, and banknotes are only available at ATMs.

The Swedish government will not say if it has produced stacks of the 1000kr banknote to be used as an emergency backup.

Quote: Pacomartin

In the USA there are 40 banknotes circulating per capita above $25 in value and 42 banknotes per capita between $3 and $24. Even if ATM's fail, people can go to a teller. Cash is readily available at Walmart or supermarkets. Yes it would slow down, but not come to a halt.

Well, when Wal-Mart attempts to pay a huge amount of small suppliers, say $15,000-$25,000 each, I doubt they can all go to the teller and take out money. Not to mention the 2+ million people they employ who insist on getting paid.

And then there's GM, Ford, Apple, Microsoft, the oil companies, the steel companies, the myriad transaction in Wall St. that take place every millisecond, Boeing, General Dynamics, General Electric, Sony, Samsung, the big food companies, the small food companies, Walgreens, the drug companies, etc.

I doubt there's enough cash for a small fraction of such transactions.

The good news is there are several electronic payments systems around, not just one. So it's not like taking down the NYSE. But if one goes down even a few hours, that's a major problem.

50 pound notes are for on-track bookmakers and cash-in-hand builders/plumbers/electricians.

Or at least in my experience that's where I saw 'em the most.