Cnote - Removal of Larger-value Bills ($500 and Up)

Removal of Larger-value Bills ($500 and Up)

The Federal Reserve announced that they were taking Large denominations of United States currency out of circulation on July 14, 1969. The one-hundred-dollar bill was the largest denomination left in circulation. All the federal reserve notes produced from Series 1928 up to before Series 1969 (i.e. 1928, 1928A, 1934, 1934A, 1934B, 1934C, 1934D, 1950, 1950A, 1950B, 1950C, 1950D, 1950E, 1963, 1966, 1966A) of the $100 denomination added up to $23.1708 billion. Since some banknotes had been destroyed, and the population was 200 million at the time, there was less than one $100 banknote per capita circulating.

As of June 30, 1969, the US coins and banknotes in circulation of all denominations were worth $50.936 billion of which $4.929 billion was circulating overseas. So the currency and coin circulating within the United States was $230 per capita. Since 1969 the demand for U.S. currency has greatly increased. As of the end of 2010, a total of 7 billion hundred dollar notes are in circulation. The total amount of circulating currency and coin passed one trillion dollars in March 2011.

Despite the degradation in the value of the U.S. $100 banknote (which was worth more in 1969 than a U.S. $500 note would be worth today), and despite competition from some more valuable foreign notes (most notably, the 500 euro banknote), there are no plans to re-issue banknotes above $100. The widespread use of electronic means to conduct large scale cash transactions today has made large-scale physical cash transactions obsolete and therefore, at least from the government's point of view, unnecessary for the conduct of legitimate business. Quoting T. Allison, Assistant to the Board of the Federal Reserve System in his October 8, 1998 testimony before the U.S. House of Representatives, Subcommittee on Domestic and International Monetary Policy, Committee on Banking and Financial Services:

There are public policies against reissuing the $500 note, mainly because many of those efficiency gains, such as lower shipment and storage costs, would accrue not only to legitimate users of bank notes, but also to money launderers, tax evaders and a variety of other law breakers who use currency in their criminal activity. While it is not at all clear that the volume of illegal drugs sold or the amount of tax evasion would necessarily increase just as a consequence of the availability of a larger dollar denomination bill, it no doubt is the case that if wrongdoers were provided with an easier mechanism to launder their funds and hide their profits, enforcement authorities could have a harder time detecting certain illicit transactions occurring in cash.