2  BIS Review 18/2005  As a central banker, my concerns regarding the money laundering would immediately be that it would erode the effectiveness and management of monetary policy. Money laundering on a grand scale has the potential of changing the demand for cash, make interest rates and exchange rates more volatile and cause high inflation rates for a country.
Money laundering is also bad for the economy and development in that it undermines legitimate business, competition and reduces the tax revenue to national authorities as launders would be operating underground outside the tax net. Money laundering is thus bad for the economy both nationally and internationally.