Reuters
The European central bank announced on Wednesday that it would permanently stop production of the 500-euro note, worth about $575 at current rates, and stop issuing the notes around the end of 2018, when a new series of 100- and 200-euro notes goes into distribution.
"It has been decided to end in a permanent manner the production of 500-euro bills," European Central Bank President Mario Draghi said after a meeting in Frankfurt, after "taking into account the worry that those bills could facilitate illicit activities."
The move was prompted by the note's suspected use in criminal activities like fraud and terrorist financing.
Another major concern about the notes - particularly in Spain, which supported ending circulation of the 500-euro note - is how they have aided smugglers who move large sums of money around Europe and all over the world.
As Tom Wainwright, author of "Narconomics" and formerly The Economist's reporter in Mexico City, explained to Business Insider, such a high-value note has been a boon to smugglers:
In Europe, the cartels have it a bit easier, because there we have this incredibly high denomination bank note, the 500-euro note ... This makes life much much easier for them. And in fact, most of the 500-euro notes in Europe are in found in Spain, which not coincidentally is the cocaine-importing capital of the continent.
These notes are sometimes known as "bin Ladens," on the basis that everybody knows that they exist, but no one's quite sure where they are, and they've made life much much easier for the cartels that have to smuggle the money back.
With just 20 notes amounting to 10,000 euros, the 500-euro note makes it relatively easy to transport and hide large sums. For reference, 1 million euros in 500-euro notes would weigh about 4.5 pounds, while the same amount in the UK's highest denomination, the 50-pound note, would weigh about 53 pounds.
REUTERS/Andrea Comas
Bundles of confiscated money worth 2 million euros ($2.7 million at the time) are displayed at a police headquarters in Madrid, January 18, 2011. Spanish police dismantled Europe's biggest and most sophisticated illegal cocaine laboratory, according to a police report.
The ease of transport has no doubt proved beneficial to Colombian criminal organizations widely present on the continent, as well as Mexico criminal groups, which are a growing force in Europe's drug scene.
Removing 500-euro notes from circulation will raise logistical costs for smugglers and make it easier for authorities to physically detect and track shipments of money.
Critics have said eliminating the 500-euro notes will infringe on privacy rights and the ability to conduct transactions discreetly, and suggested limiting transaction sizes in ECB countries instead.