A former bank chief is urging central banks to get rid of large denomination bills - such as the European 500 Euro, US $100, and British 50 Pound notes - to attack illegal cash transactions preferred by terrorists, drug lords and tax evaders.

In a new report for the Harvard Kennedy School, the former chief executive of Standard Chartered bank Peter Sands said global illegal money flows exceed AU$2.8 trillion per year.  But rather than focus just on criminals, central banks in G20 countries should now target the cash itself - and do so before their next meeting in China in September.

Large denomination notes "play little role in the functioning of the legitimate economy, yet a crucial role in the underground economy", according to Mr. Sands, and have become the "currency of corrupt elites, of crime of all sorts and of tax evasion".  These transactions will become much more expensive and difficult to carry out and hide if big bills aren't available. 

European Central Bank senior officials said they needed more evidence that the notes facilitate criminal activity.  The UK already asked banks to stop handling 500 Euro notes back in 2010 after a report found they were used pretty much only by criminals.