The $100 bill may look like an ordinary banknote to you and me, but to one former treasury secretary, it is a root of evil in our society.
Larry Summers, former secretary of the treasury department under the Clinton administration and economic adviser to President Barack Obama, is pushing for the government to get rid of the $100 bill because it is only being used as a tool for corruption.
In an article he wrote for the Washington Post, Summers says that criminal and terrorist organizations are using paper currencies with large denominations, such as the $100 bill and the €500 bill, to illicitly move their money around.
This assertion was based on the findings of a study conducted by Harvard senior fellow Peter Sands and his colleagues, which highlighted the dependence of criminals on high denomination notes to facilitate illegal transactions.
One million dollars in €500 bills, for example, weigh in at just 2.2 pounds, while the same amount in $20 bills weigh in at only 50 pounds.
In order to stop such underhanded tactics by shady individuals, Summers points out that the government should stop releasing new $100 bills, as well as remove the old ones from circulation.
Summers makes reference to the Luxembourg government's reluctance to support plans of the European Central Bank (ECB) to end the use of €500 bills.
He says that Luxembourg has had a long history of helping money launderers, tax evaders and other advocates of bank secrecy laws. The country has also printed banknotes 20 more times, relative to its gross domestic, than any other country in Europe.
According to the U.S. Treasury, there are no plans to make changes to the denominations that are currently in circulation. The dollar bills that are being used today include those for the $1, $2, $5, $10, $20, $50 and $100.
While bills with larger denominations such as those for the $500, $1,000, $5,000 and $10,000 were issued before, they were primarily used by banks and have been discontinued since 1969.
Summers argues that taking out the $50 or $100 bills won't stop the occurrence of illegal transactions, but that it would make it more difficult for criminal groups to launder their money.
"It may not be a free lunch, but it is a very cheap lunch," Summers says.
Photo: Frankie Leon | Flickr
