Switzerland’s Controversial 1,000-Franc Note Is Getting a New Look

(Bloomberg) -- At jeweller Les Millionnaires, tucked away in the historic old town of Zurich, being handed a 1,000-franc bill ($1,002) to settle a purchase is no unusual event.

“It's quite frequent that we've got someone who comes in looking for a present and who pays in cash because they don't want their partner to find out, “ said one of the proprietors of the shop, which sells earrings, necklaces and bracelets made of gold with precious stones. “It's the surprise effect.”

True to Switzerland's penchant for discretion — one reason cash has remained popular in the generally tech-savvy country even as its use is dwindling elsewhere — she declines to give her name. “Here in our shop, we do get 1,000 franc notes when it's a very big purchase.”

Along with 10,000-dollar notes in Singapore and Brunei — current exchange rate for both is about $7,400 — the top Swiss denomination is one of the world's most valuable. A revamped design is due to be unveiled on March 5, in defiance of international calls that the bills aid crime and tax evasion.

Criticism of large denomination bills has forced changes elsewhere, and the European Central Bank has stopped new issuance of its 500-euro note. Harvard Professor Kenneth Rogoff is among those who favor getting rid of large-value banknotes, though he says private people should be allowed the privacy to “buy their mistress a $20 item” without anyone being able to tell.

The Swiss, once famous for offering the world's wealthy a secret place to park their money, take privacy very seriously: the launch of a national rail card — like London's Oyster card — provoked an outcry it could be used to track travel habits.

The desire to remain anonymous isn't lost on SNB Vice President Fritz Zurbruegg, who noted in a 2017 speech that big bills were an “efficient” way to settle large payments and that issuance and return of 1,000-franc notes indicated they were used for transactions.

Just off the tree-lined avenue of Bahnhofstrasse, the throng of lunchtime customers at a food truck bears out the idea that big notes are popular. Martin Heiss, who runs the stand, says he regularly receives 200-franc notes for his pita bread sandwiches, which cost about 15 francs.

Such bills constitute just over 10 percent of cash machine withdrawals, according to a central bank survey. Almost 20 percent of people said they've used cash when making payments of more than 1,000 francs.

Yet even the cash loving Swiss have their limits. In Zug, famous as a low-tax base for multinational corporations, Roger Wermuth, head of the cantonal budget office, said a thorough check of the books as of 2016 revealed no receipts of payments in cash.

In Zurich, the city's cashier only very rarely receives tax payments in cash and big bills were practically never used. Even Martin Buyle, the chief executive officer of Orell Fuessli, the 500-year-old house that produces Switzerland's banknotes, doesn't expect the new 1,000-franc note to be commonly used.

Cash will retain its appeal “for a very long time,” thanks to the anonymity, he said. As for the big bill, “it'll be a very nice note that most of us will never set eyes on unless you go to a bank and have them show it to you.”

--With assistance from Gina Turner and Zoe Schneeweiss.

To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jan Dahinten