Liberty and the 500 Euro note – BBH

By FXStreet Analysts at Brown Brothers Harriman explained that the internecine pitch battle between ECB President Draghi and the man who may very well be his successor, Bundesbank President Weidmann opened a new front this week.”It is over the future of the 500 euro note.”

Key Quotes:

“Practically, every initiative by Draghi has been resisted by the Bundesbank.

Sometimes it puts the Bundesbank at odds with Berlin, like over the Outright Market Transactions (OMT), which has not been operationalized.

Still, after unsuccessfully blocking the program, Weidmann provided testimony in a case before the German High Court, seeking an injunction against the ECB. Draghi prevailed.

Ahead of the March 10 ECB meeting, where Weidmann is resisting Draghi’s call for more action, a fresh dispute has arisen.

Draghi has indicated that the ECB is looking at phasing out the 500 euro note on grounds that it aids criminal activity and possibly terrorism.

Weidmann argues against this on grounds that it sends the wrong message at a time when the ECB is imposing negative interest rates. There are some who will see the abolition of the 500 euro note as part of a larger effort to drive …read more

Source:: FX Street