The E500 note is one of the many mysteries surrounding the birth of the euro. For whom, exactly, was the equivalent of $600 or £400 designed? No other significant currency is available in a form that allows £1m-worth to be comfortably carried in a briefcase, and which is effectively non-negotiable in everyday use.

The Spanish used to dub the notes “Bin Ladens”, because everybody knew they existed, but nobody had never seen one. Now BoA Merrill Lynch’s Athanasios Vamvakidis has proposed a rather scary way to use them to solve – or at least dramatically reduce – the euro-crisis. The E500 notes in issue add up to about E290bn, one-third of the face value of all euros in circulation. The European Central Bank estimates that two-thirds of those E500 notes are used as a store of value (rather than as a medium of exchange).

We can guess whose value they store – the UK’s Serious Organised Crime Agency estimates that 90 per cent of the E500 notes in Britain are held by criminals. Curiously, the outstanding proportion of the notes in the eurozone is falling slightly, which suggests that the smarter villains are moving into other stores of value. Perhaps they have also thought of Mr Vamvakidis’s idea. He suggests that the ECB call in the whole lot, and that beyond a certain date in the near future, the notes should become worthless. Anyone handing in a bulging briefcase before that date could be asked to reveal just which casino they got so lucky in, before being allowed to deposit the cash.

Understandably, the ECB will admit to no such plan, but after the tarring and feathering of big depositors in Cypriot banks, it’s not quite as whacky as it sounds. Until now, the pain of the west’s banking crisis has been borne by innocent taxpayers, but as it goes on, others will be forced to “burden share” (as the official language puts it). Quite a few of the legitimate holders of wads of E500 notes were on the other side of the trades which busted the banks in the first place, getting bankrolled for some ambitious property deal, for example. The argument that they should repay some of their debt to society would be music to the ears of desperate governments everywhere. If, say, one-third of the notes are not presented in time, the ECB’s liability would be cut by a very handy E100 billion. Oh Mr Vamakidis, what have you started?

Nostalgia corner

During the best days of the Thatcher administration, Britain’s public finances were in such fine shape that there were plausible projections of magnificent Budget surpluses, which would mean no new government stock issues, and early redemption of those outstanding. The traders in the gilts market fretted that there would be nothing left for them to trade (although few of them went so far as to suggest that they would then go and do something more useful instead).

It never happened. Governments can always find ways to spend other people’s money, because that’s why most politicians go into the trade in the first place. Since then, the policy of successive administrations has been rising financial incontinence. Yet the Bank of England’s quantatitive easing has mopped up one-third of the national debt, driving up gilt-edged prices to levels that nobody would pay with their own money. So are the dealers happy now? Er, no. Their market is drying up, after all, but for completely different reasons. There’s just no pleasing some people.

No sexism, please

Tut tut, Jock Miller. Melrose Industries, the engineering business he built after tiring of retirement, is one of six FTSE100 companies without a woman on the board. Aside from four (shortly to be three with Glenstrata) butch miners and Croda International, Melrose sticks out as the least politically correct of Britain’s biggest companies. Vince Cable is not amused, and is again muttering about quotas, even though few successful female executives want them. Never mind that there’s no convincing correlation between share performance and gender balance, or that Melrose has delivered a stellar performance in a workaday sector. Presumably, with a couple of women on board, it would have been even better. Or not.

This is an updated version of my Saturday FT column

http://www.ft.com/cms/s/0/a5fd3f98-a361-11e2-8f9c-00144feabdc0.html#axzz2QW9if3wO

Advertisements