The problem is it annoys everyone that deals with significant quantities of cash. I keep cash on hand just in case a bank glitch messes with my checking account. Forcing me to keep larger bills reduces my available hiding places and makes it easier to rob me.
PS: I suggest most people without significant debt keep 2 weeks living expences (food/fuel/etc) in cash just in case.
The main goal is probably to force them out of the UK and into someone else's jurisdiction.
It's similar to the situation that occurred when the Irish Government set up the Criminal Assets Bureau in 1996 (the only real achievement of theirs in my lifetime), all of our major drug dealers and major bank robbers who were operating with impunity up to that point immediately started to flee the country.
They went to Holland, Portugal and Spain mainly. All CAB had to do was produce evidence in a civil case (beyond reasonable doubt, much easier to prosecute than criminal law) that the person had no visible source of income to own the assets that they had (houses, cars, champion racehorses, yachts). CAB could then simply freeze their bank accounts and confiscate their assets. It was the first organisation of it's kind in the world, and there are plans to implement similar models elsewhere due to it's unprecedented success. If all of Europe did this it would make drug trafficker's lives much more difficult - they simply couldn't enjoy the proceeds of their ill-gotten gains, or it would be confiscated before long.
However, I remember reading about the financial crisis of '08 and how a lot of UK banks (RBS & HBOS) were close to shutting down and how terrified the politicians were that the cash machine and EPOS networks would stop working.
It did make me think that keeping a wad of cash somewhere might be a good idea.
Besides, if the shit hits the fan who's going to have change for a 500 anyway? Unless you're just expecting a glitch with your bank, in which case it's best to just have a couple of different accounts.
...maybe booze and sex. Supposing anyone lasts long enough to let their guard down.
As long as you trust the ECB to keep inflation down, it probably makes more sense to stick with eurobills. It’s a lot easier to inspect a modern bank note than assay an allegedly gold coin.