Australia has around $100 billion of banknotes in circulation.
Between 55 per cent and 80 per cent of this is being hoarded.
Up to 11 per cent is used in the black economy, and up to 26 per cent for legitimate purchases.
The Reserve Bank says the majority of the $100 billion of banknotes circulating in Australia are being hoarded as a store-of-value, while a similar proportion that is being used for legitimate payments is also being deployed to facilitate crime.
In a new research paper in its latest Bulletin, published on Thursday morning, the RBA said between 9 per cent and 26 per cent of all cash, or $9 billion to $26 billion, is being used to make legitimate transactions to pay for goods and services. This is down 5 per cent since the start of the pandemic as more consumers shift to digital payments.
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James Eyers writes on banking, payments and fintech. He is a former legal and investment banking editor at the AFR, has degrees in commerce and law from UNSW, and is co-author of Buy now, pay later: The extraordinary story of Afterpay Connect with James on Twitter. Email James at jeyers@afr.com.au
