Budget says some paper currency will no longer be legal tender
$735 million worth of $1,000 bills are still in circulation
The Liberal government announced Tuesday — in an item buried deep in its 367-page 2018 budget document — that some paper currency will no longer be accepted as legal tender.
While the Bank of Canada stopped printing the $1,000 note in 2000, there are still about 700,000 of those bills still in circulation across the country.
As part of a plan to crack down on counterfeiting, money laundering and tax evasion, the government will no longer allow those bills to be used to pay for goods and services. The budget does not say when those bills will cease to be legal tender.
The $1,000 note has long been a favourite of organized crime because it makes transporting money easier. But it's not the only bill headed for the dustbin of history. The $500, $25, $2 and $1 bills — none of which are currently being printed by the Bank of Canada and are rarely seen — also will no longer be usable.
"In short, removing legal tender status means that some older bank notes would no longer have the official status of being approved for payments of debt. Essentially, that means you would no longer be able to spend that 1935 $25 bank note to buy items at a store," the central bank explains on its website.
"Having the power to remove legal tender status from bank notes means that we can do a better job of keeping the notes in circulation current. Newer bank notes have better security features that make them difficult to counterfeit, and they are in better condition overall."
While the budget didn't say exactly when the legal tender status will be withdrawn — legislative amendments are coming — it sought to reassure Canadians that still hold these bills that the Bank of Canada will continue to honour them and exchange them at face value in the meantime.
A Canadian can still deposit those notes at their local bank or credit union branch, which would in turn send them on to the central bank to be destroyed.
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This is not the first time a monetary instrument has been phased out by a budget. In 2012, while announcing some austerity measures to get the federal budget back to balance, then-finance minister Jim Flaherty announced the penny would be discontinued and cash transactions rounded.
The $1,000 bills, nicknamed "pinkies" because of their reddish-purple hue, were phased out in 2000 at the urging of the RCMP, which wanted to curb their use in money-laundering.
At the time, the government said individuals could hold these bills for as long as they wanted, but no new ones would be printed. Now there's a new incentive to part with the high-value cash: Canadians could find they're sitting on stacks of useless currency if they put off exchanging it at a bank.
The Bank of Canada has struggled to eliminate the bill. There were one million of the bills still in circulation in 2006, a number that has dropped by just 300,000 in the twelve years since, according to the latest information available from the bank.
First introduced in 1935, the $1,000 bill has a portrait of the Queen on the front and a pair of pine grosbeaks on the back.
There are an estimated 104 million $2 bills still in circulation — they were phased out in 1996 and replaced by the toonie coin — but the bank suggests most of those are held by Canadians who have kept them for sentimental reasons. Roughly 151 million $1 bills are also outstanding.