Mar 31, 2016
Ifo President Hans-Werner Sinn has expressed his opposition to the abolition of the 500 euro notes, to an upper limit on cash payments and to negative interest rates. "The European Central Bank (ECB) wants to prevent banks from hoarding cash in order to force them to pay negative deposit rates. If they succeed, savers are also likely to pay penalty interest on their deposits”, he said in Munich on Thursday. “Doing away with the 500 euro banknotes will enable the ECB to increase the penalty interest rate from 0.4 percent to 0.75 percent, because it is more expensive for the banks to hoard cash in the form of 200 euro notes. If this leads to a corresponding decline in the whole interest rate spectrum, Germany, the second largest creditor in the world, would lose an additional eight billion euros in revenue annually.”
The majority of German economists is also opposed to the abolition of the 500 euro note. This is the result of the most recent Economists Panel, a survey by the Ifo Institute in cooperation with the FAZ. In the survey, 54 percent of the participating 185 professors stated that cash payments should not be restricted. Only 44 percent supported a ceiling for cast transactions. The abolition of cash found the support of only 2 percent.
Mar 31, 2016