How can big notes trigger inflation?
Inflation causes the need for bigger notes..
Sweden have 1000 sek as biggest note (about the same in RMB) and also one that is 10 000 sek but they are almost never used.
Sometimes I wished there was a 500 rmb bill is when I
1. buy expensive stuff and pay in cash (like a TV, computer, furniture etc) (and NO I will not use the credit card in small shops, because skimming is easy in Sweden so just imagine how easy it is to steal your credit card information in China).
2. Pay the company for central heating and "wu ye fei".
3. Make a payment for goods, often the company I buy from don't use the same bank as I do, so to not have to wait 1-2 days for the transfer, I usually make a cash withdrawal and go to the other bank about 40 min away and deposit it to their account (imagine
50 000 RMB in cash, it's like carrying a brick...).
and so on.. I know stories of Chinese people buying a new car and paying in cash, they have a bag filled with 100 RMB notes.. Same when we bought our appartment, we used credit cards in this case, but not all the buyers did, so some people showed up with
like 200,000 RMB in cash.. that's alot of 100 RMB bills..
But the easiest way to see the need for bigger notes is to just go to a bank office, sit one or two hours and just watch the big piles of 100 RMB bills that some people deposit or withdraw, I shit you not when I say that some people need a backpack to carry
all the bills home..