The European Central Bank is examining ditching the €500 note , its president said on Monday, describing the note used by savers to hoard tens of billions of euros as an instrument also used by criminals.

Mario Draghi said savers would not be penalised and could use the €200 note instead to hold their cash.

“People will continue saving the €200 note,” Mario Draghi told lawmakers in the European Parliament, saying that governors were considering action.

“The €500 note is being viewed increasingly as an instrument for illegal activities,” he said. “It has nothing to do with reducing cash.”

The amount of cash in the euro zone rose to more than €1 trillion ($1.1 trillion) last year, with almost 30 per cent of it hoarded in €500 notes, reflecting fears about banks as well as exasperation with low returns on savings.

European finance ministers called on the ECB on Friday to look at ways to tighten access to the notes as part of a move to cut funding of militant activity. The €500 note is not printed by the Cebtral Bank of Ireland, which mainly produces €10 and €20 notes. ECB central banks divided up the production of notes between them. It is possible to tell where each note is printed by a code it carries, though all notes are legal tender in all euro countries.

It is more than five times the value of the largest US note – the $100 bill.

Germany was one of the early champions of the €500 note to match the value of its old 1,000 mark note and cater to Germans’ traditional preference for cash over electronic money.

Cash hoarding has become more prominent throughout the years of crisis. Capital controls prohibit large withdrawals in Greece, where savers have hoarded tens of billions, after big depositors lost money in the country’s financial bailout.

- Reuters