It's also the case that criminals prefer cash, and a large number of small denomination notes could be used to facilitate a large number of small value crimes more easily.
Drug dealing is the obvious one, but there are others. I witnessed a shoplifters being stopped by a security guard once, with £200 worth of goods in their coat (booze, steaks), and they offered a £5 note - "it's all I have" - and by making that offer of payment, they reduced the crime and the penalty somewhat to the point the manager and security officer removed the goods, asked them to leave and told them they weren't welcome any more - no police involved. For all that bank knew, you were running a gang of shoplifters doing this.
