What prevents people from withdrawing all their money in 500€ notes from the bank, trading them in for 550€, exchanging the money for 500€ notes at the bank and repeating this until they're filthy rich?
On top of that it is not that easy to acquire 500€ notes: going to your regular ATM will not work because nobody has a use for these large notes except to store money.
You might end up selling them for 0.
I'm pretty confident that these notes are only there for shady if not criminal uses and nothing else. The legal uses are merely justifications for the real, forbidden ones.