ZURICH (Reuters) - Switzerland’s central bank launched a new 1,000 Swiss franc ($998.90) note on Tuesday, saying one of the world’s most valuable banknotes catered to the popularity of cash in Swiss culture and was not a help for criminals.
The Swiss National Bank’s announcement of the new lilac-coloured note, available from March 13, comes as other central banks move away from large notes because of concerns about their use by criminals and money launderers.
“The choice of the denomination is a matter for the SNB, but the current denominations are appropriate and correspond to what people want,” Vice Chairman Fritz Zurbruegg told a news conference.
“The 1,000 franc note is used for payments and also has a function as a store of value. Cash is still very popular in Switzerland, it is a cultural phenomenon.”
Since January this year, 17 of the 19 central banks in the eurozone have stopped issuing 500 euro notes because of concerns they are often used for illegal activities.
Germany’s Bundesbank and the Austrian National Bank will continue issuing 500 euro notes until April 26, 2019.
The SNB is following discussions about illicit use very closely, Zurbruegg said, but there were no indications that criminals used the 1,000 franc note more frequently than other notes.
“In Switzerland the 1,000 franc note is used...particularly for high-value purchase and for paying bills at the post office,” he said.
There are about 47 million 1,000 franc notes in circulation, amounting to 10.5 percent of the number and 62 percent of the value of all banknotes in Switzerland, according to the SNB.
The new note, which has several security features to combat forgery, is part of an overhaul of the Swiss currency, which will see the 100 franc note updated in September.
In recent years the 1,000 franc note has also been used by people wishing to avoid negative interest rates, although these apply to only a tiny fraction of wealthy savers. There has been some suspicion people have been withdrawing money from bank accounts at the end of the year to lower their tax bills.
Low interest rates meant people did not lose money by stashing money under the mattress, and the use of cash was increasing, although Zurbruegg said he did not see a major surge in the hoarding of bank notes.
“The demand for cash has increased at the end of the year for decades, obviously due to Christmas presents being bought and people giving cash,” he said.
“We are aware that studies also show other factors like possible tax evasion. Should the 1,000 franc note be used improperly for tax evasion that is an issue for the legislators and the authorities to prevent.”
($1 = 1.0011 Swiss francs)
Reporting by John Revill, Editing by William Maclean