Saturday, February 13, 2010

The Coming End of Paper Money

On all Federal Reserve Notes appear the words "This note is legal tender for all debts, public and private." FRN notes are bearer notes. Using them does not require personal identification (although some establishments, such as McDonalds, will not accept $100 notes).

Although euro notes do not state legal tender status, the legal framework of the euro specifies its legal tender status. However, national laws in eurozone countries may restrict the maximal amounts that can be settled by coins or notes.

To address the problem of tax evasion, on February 9, 2010, the Greek government announced its proposal to limit tender status for euro notes to 1,500 euros in transactions between persons and businesses and between businesses. Transactions above that amount will have to be done through debit or credit cards, which can be traced to the individual or business and thus taxed.

Imposing a low limit on the legal tender status of euro notes in financial transactions could prove an attractive approach to reducing tax evasion throughout the eurozone. Watch for Portugal, Spain, and Italy to impose similar limits in the months ahead.

1 comment :

Warren said...

And they will enforce this how exactly?

This measure will largely fail and the bureaucrats promulgating it will look like fools.

In fact people might go out of their way to flout this law just to show that the authorities have no right or authority in this matter and no power to back up their words in any case.