Where Have the $500 Bills Gone?

Where have all the $500 bills gone? For much of its history, the US issued notes in the denominations of $500, $1000, $5000, and $10000. But, in 1969, the last notes were effectively retired.

There were basically two reasons given by the Federal Reserve for ending these notes. One was that usage of them was declining as by the 1960s, businesses and banks were using wire transfers and consumers were using checks. The second reason was that only criminals used such high denominations. This sounds pretty logical until you actually looks at the facts.

By the 1960s, wire transfers had indeed ended the need for $5000 and $10000 notes. But, the other notes, especially the $500, were still being used as often as in the past. Also, there was no evidence that criminals were the primary users of these notes. In fact, there were arguments since the 1930s that criminals preferred lower denominations as they were more inconspicuous.

Personally, I think the notes were ended because the Fed did not see the point in the expense of maintaining these notes given its belief that checks and credit cards would eliminate the need for cash.

Of course, we still see some of the same arguments today over high denomination Euros, Swiss Francs, and even $100 bills.

One could argue that CBDCs will eliminate the need for cash. But, I don’t think cash is going anywhere. That’s why I argue for cryptobanknotes, cash with augmented capabilities, that will meet the challenge of CBDCs and crypto.