Frankfurt Letter, week beginning May 9

-The European Central Bank (ECB)

The ECB decided to discontinue production and issuance of €500 banknote.

The Governing Council of the ECB concluded a review of the denominational structure of the Europa series on Wednesday. The bank decided to permanently stop producing the €500 banknote and to exclude it from the Europa series, taking into account concerns that this banknote could facilitate illicit activities.

The President of Ifo, Munich-based Institute for Economic Research, Clemens Fuest criticized the abolition of the 500 euro banknote.

"The abolition of the 500 euro banknote undermines confidence in the European Central Bank (ECB). It will inevitably create the impression that the main reason for withdrawing the banknote is to push negative interest rates even lower,” Fuest said on Wednesday in Munich.

"It would be easier for the ECB to make further cuts to negative interest rates. Negative interest rates have no impact on cash, but they do affect electronic bank accounts. It would be significantly more expensive for banks and savings banks to store lots of smaller banknotes,” Fuest explained.

-Economic data

On the economic data side, in March 2016 compared with February 2016, the seasonally adjusted volume of retail trade fell by 0.5 percent in the euro area and by 0.7 percent in the European Union, according to estimates from Eurostat, the statistical office of the European Union.

-News from Germany

Turkish Customs and Trade Minister Bulent Tufenkci, visited Frankfurt, Germany's leading financial city.

He met up with Turkish and German entrepreneurs at an event organized jointly by Rhein-Neckar Turkish Employers' Association (TID) and the Rhein-Neckar Chamber of Industry and Commerce (IHK).

-The week ahead

This week, global markets will monitor the Eurozone's industrial production and GDP figures from flash estimates of the European Union and the euro area.

09 May,2016