Loading ...FRANKFURT — Bundesbank President Jens Weidmann on Wednesday criticized efforts to abolish the €500 note and presented an unusual 22-page defense of the use of cash, warning that any move away from hard currency would risk undermining confidence in the euro.
“If we tell citizens the bank notes they currently hold are not valid, that would impact trust,” Weidmann told reporters at the Bundesbank’s annual news conference, in response to a question about the possible withdrawal of the highest denomination euro bank note.
European Central Bank President Mario Draghi has said the bank is considering doing away with the €500 bill amid concerns over its use by criminals. But many Germans see such a move as a first step toward the abolition of cash, which could make it easier for the ECB to cut rates further below zero.
“It is in my view doubtful whether terrorists or criminals can really be stopped because large notes are eliminated,” he added.
Weidmann also repeated his reservations about further expansionary monetary policy to combat very low rates of inflation in the eurozone — a view that puts the Bundesbank at odds with many other ECB policy makers.
An expanded version of this report appears on WSJ.com.