Boom in $100 bills raises more questions than answers
Despite Australia’s move to a cashless society, $100 banknotes are surging in numbers - but no one seems to know where they are.
One hundred dollar banknotes have surged in numbers despite the nation’s shift towards a cashless society.
New Reserve Bank of Australia figures show that there is now $36.4 billion worth of $100 bills in circulation, up 33 per cent in just five years.
That equates to more than a dozen $100 notes held by every man, woman and child, and has raised questions about just who is holding them.
Are they stuffed under mattresses, sent offshore or stashed away by drug lords? There are no official answers — only good guesses.
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There have been calls for Australia to follow the leads of India in 2016 and Europe this year in scrapping large denomination banknotes to stop their use by hardcore criminals and tax evaders.
However, the RBA says the reason for the growth is less sinister, and it is actually developing a new $100 note to be issued next year.
“Most demand seems to be due to hoarding or store-of-value demand, both domestically and internationally,” an RBA spokeswoman said.
“It is likely that most people hold none, some people hold a few, and a few people hold a lot.”
The RBA expects demand for $100 notes to continue to grow, but it estimates the black economy activities only make up a relatively small share of demand.
“Reports from law enforcement also suggest that criminals tend to prefer to hold $50s rather than $100s, as $50s attract less attention when spent,” the spokeswoman said.
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An RBA research paper released late last year estimated that less than 8 per cent of banknotes are used in the black economy, up to 10 per cent are lost, and more than half are used as a store of wealth.
The $100 bill is the only Australian banknote at record-high circulation levels.
There are more than twice as many $50 notes — a staple at ATMS — on issue, while $5 notes are at their lowest level in three years, the RBA data shows.
Consumer finance specialist Lisa Montgomery said the figures told a different story than all the research highlighting the growth of the cashless economy.
“When people are opening up their wallets we are seeing cards, not $100 bills,” she said.
“It opens up more questions than answers.”
Ms Montgomery said $100 notes were disliked by retailers, and “a note of that size creates a problem”.
“It’s a difficult note to cash because there’s not a lot of cash going around, and I often hear people apologising to shopkeepers for having a $100 bill,” she said.
“It’s not a note that people covet, and it’s only fun if you are a five year old and end up with one in a birthday card.”