Norway's finance minister wants to scrap the 1000-krone banknote to disrupt criminal cash flows. Jens Stoltenberg has formally asked the central bank to consider removing the high-value note from circulation. He said the move aims to make it harder for criminals to pay in cash and launder money.
The Fight Against a Costly Shadow Economy
Stoltenberg pointed to a 2022 socio-economic analysis that estimated the black economy costs Norwegian society 80 billion kroner. The report stated 32 billion of that is considered directly lost tax revenue. The finance minister acknowledged the black economy is hard to measure because it is hidden from authorities. He stated, however, that parts of it are conducted using cash. Removing the highest denomination note is one of several measures the government is proposing to tackle economic crime linked to organized crime groups.
A Nordic Shift in Cash Policy
This move aligns Norway with a regional trend. Denmark removed its 1000-krone note last year. Sweden, however, still has its thousand-kronor note in circulation. In the Eurozone, the 500 euro note was the highest denomination. It was taken out of production in 2019, though existing notes remain legal tender. The Norwegian proposal places the country between its Nordic neighbors, following Denmark's lead while Sweden maintains its current cash system. The decision ultimately rests with Norges Bank, Norway's independent central bank, which the finance minister has now formally requested to evaluate the measure.
Understanding the Scale of the Problem
The government's focus stems from the significant financial impact of underground economic activity. The cited 80-billion-kroner figure represents a substantial drain, with the lost 32 billion in tax revenue highlighting the direct cost to public services and infrastructure funding. This lost revenue could otherwise support healthcare, education, or transportation projects. The use of high-value banknotes facilitates moving large sums of physical money discreetly, a method often associated with money laundering and illicit transactions that avoid the oversight of the financial system.
Practical Impacts and the Future of Cash
Eliminating the 1000-krone note would have practical consequences for legitimate cash users. It would mean the 500-krone note becomes the highest value banknote in Norway. For large legitimate cash purchases, such as used cars or private sales of expensive items, this would require handling thicker stacks of bills, making transactions more cumbersome. This inconvenience for lawful users is part of the intended deterrent effect against illicit finance. The policy reflects a broader international debate about the role of cash in an increasingly digital economy and the balance between privacy, convenience, and state oversight of financial flows.
The Path Forward and Central Bank's Role
The ball is now in the court of Norges Bank. The central bank will conduct its own assessment, weighing the government's anti-crime objectives against operational and economic considerations. Their evaluation will likely consider the costs of producing and maintaining different denominations, the patterns of legitimate cash usage by the public and businesses, and the overall functionality of the cash system. A public consultation process may follow before any final decision is made. This step ensures stakeholders, including banks, retailers, and consumer groups, can provide input on how such a change would affect their operations and daily life.
Weighing Digital Exclusion Against Financial Crime
A critical consideration in this debate is digital inclusion. While digital payments are widespread in Norway, a portion of the population, particularly some elderly citizens and certain groups, still relies heavily on cash for daily transactions. Removing the highest denomination could complicate their ability to manage finances, especially for larger withdrawals or storing value. The government and central bank must consider whether mitigating measures or support for transitioning to digital payments would be necessary to ensure no one is unfairly disadvantaged by a policy aimed primarily at criminal actors.
The Broader Strategy to Curb Illicit Finance
Scrapping the banknote is not a standalone solution but part of a package of measures. Stoltenberg emphasized it is one of several actions being presented to stop the black economy run by criminals. Other measures could include enhanced reporting requirements for certain professions, stricter enforcement of existing laws, or increased resources for financial crime units. The multi-pronged approach recognizes that determined criminal networks will adapt, so pressure must be applied across multiple fronts within the financial system to be effective in the long term.
International Context and Effectiveness
Looking at the international experience provides clues about potential outcomes. The cessation of the 500-euro note production was driven by similar concerns. Studies on its impact show mixed results, suggesting that while it may raise the cost and logistical hassle for criminals, it does not eliminate illicit cash use entirely. The effectiveness in Denmark, which made the change more recently, is still being evaluated. Norway's decision will likely be informed by these real-world case studies from other European nations with similar advanced economies and high levels of digital payment adoption.
A Symbolic Move in a Cash-Lite Society
The proposal is also symbolic, signaling the government's commitment to modernizing the financial system's infrastructure to close loopholes. Norway is already one of the world's most cash-lite societies, with card and mobile payments dominating. The physical circulation of the 1000-krone note is already relatively low compared to smaller denominations. Therefore, its removal may have a more significant symbolic and disruptive impact on criminal operations than on the day-to-day life of most Norwegians, reinforcing the official preference for traceable digital transactions over anonymous physical cash for high-value exchanges.