Why haven't bank notes kept up with inflation?

CanadianLurker wrote: ↑ - not releasing larger denomination bills (and withdrawing ones that were previously issued) makes it harder for criminals to launder money and harder to deal with ill-gotten cash hordes

That is actually the reason why the $1000 CDN bill was withdrawn from circulation; too easy for criminals to launder large sums of money.

From Wikikpedia http://en.wikipedia.org/wiki/Withdrawn_ ... tes#.24500 :

Printing of the $1,000 note ceased in 2000. The denomination was withdrawn on the advice of the Solicitor General and the Royal Canadian Mounted Police (RCMP), as it was often used for money laundering and organized crime.[4] The Bank of Canada has requested that financial institutions return $1,000 notes for destruction.[5] The colour was pink.

Which is why $1000 bills were referred to as "pinkies".

On the other end of the spectrum, the penny is gone.

A set of large bills isn't very convenient. Instead of giving someone a "bag of cash", you could get a certified cheque, which takes less space and is easier to get into the payee's bank, or something electronic. Of course, a cheque is slower, and not as private (if you want to keep the transaction hidden). The government is probably interested in the latter.

I suspect the demand for large bills isn't there. What sort of really expensive things could you actually buy with cash these days? Good luck getting a hotel room, plane ticket, car, or house. Cash is generally used for small purchases, such as fast food.

The Canadian Payment Association sets limits on how big a cheque can be: $25 million. I'm guessing a cheque that large would result in a very long hold. If you needed to buy something for $100 million, that's four or five cheques, or a lot of briefcases. (Someone calculated the typical briefcase could only hold $1 to $4 million in cash, and with inflation the value of a cash-stuffed briefcase is falling.)

On a vaguely related note, I saw a video where someone tried to pay $6000+ dollars in property tax bills in the US with $1 bills, and another person doing something similarly but with bills so tightly folded they took more than a minute to unwrap, each. (The guy got arrested because he insisted on staying until every dollar was counting, even after the business or government office closed.)

bcdriver wrote: ↑In 1935 we even had $1000 bills, now the highest we have is $100 even though inflation has devalued the loonie about 20 times in that time-frame. Combined with 10x reduction in banknote size, the highest bank note has about 200x less buying power than it did in 1935.

Just curious, when everything else has increased with inflation, why not bank notes as well?

What would you even do with a $1,000 bill? I rarely use cash at all, and if I do it's normally for a purchase of $5 or less. I wouldn't even know what to do with $100 bill. I guess $100s would be good for hookers and blow, but that's about it...

I recently bought a computer for a little under $1000. I have a reward card, so got back 1%. It's not much, but if I was able to buy a computer for $1000 in cash, I'm basically paying $10 for the right to use cash rather than credit. (My card and chequing account don't have fees, either, so it's basically free money.)

I had a problem with getting it online, since resolved, but I could have gone to a store and used my credit card there. The latter would cost me two bus tickets if I didn't have a metropass. If I used cash I would have to do it in person. (I can't even do it by mail, although that would have cost a stamp anyway.) So the cost in cash could have been $16 (two $3 tickets, plus no $10 cashback).

Any time you have to buy something expensive, there's both barriers to using cash and advantages to using almost anything else.

Finally, what mugger wouldn't enjoy a $1,000 bill?

FoFai2015 wrote: ↑
Finally, what mugger wouldn't enjoy a $1,000 bill?

I'd rather have a stack of $20s. They won't take $1000 bills at the grocery store :-)

FoFai2015 wrote: ↑... bills so tightly folded they took more than a minute to unwrap, each. (The guy got arrested because he insisted on staying until every dollar was counting, even after the business or government office closed.)

He got his a~~ in the brick house for being a tightwad. Poetry!