High-Denomination Notes, CBDCs, and Crime

What is the relationship between high-denomination banknotes and CBDCs? Well, there are two basic arguments for getting rid of high-denomination notes: enabling interest rates to go negative and to reduce crime. The latter claim is based on the end of anonymity in high-value transactions. This debate on anonymity is a big part of CBDC development.

In a 2017 article, James McAndrews argues that while the elimination of high-denomination notes and their anonymity may decrease crime in the aggregate, there would be a rise in organized crime. Crime organizations would establish their own monetary systems, expand money laundering through taking over legitimate businesses, and enslave immigrant workers who would literally work for food.

If McAndrews is right, would a CBDC without any anonymity have the same effect on crime and have the same social costs? Would crime organizations establish their own closed-loop cryptocurrencies, pad invoices of internet businesses (driving up costs for everyone), and fleece the most vulnerable in society?

There may be more social costs to a lack of anonymity than we have considered in recent debates.