Paper Money

Cashless society not here yet, with $100 gaining

Many of those who carefully read the Bureau of Engraving and Printing’s Production Reports have already recognized the popularity of the $100 bill, but for those who haven’t, the Federal Reserve Bank of Richmond offers an explanation. 

“Is Cash Still King?” asks Tim Sablik, in an article of the same name in the bank’s economics magazine, Econ Focus, for the second quarter of 2018. He addresses the question of why, despite the rise of so many alternative means of payment, cash has never been more popular.

Sablik says that high-denomination notes are driving the growth of cash. A 2016 survey showed U.S. residents held an average of $219 in cash on their person or property, yet the amount of U.S. currency in circulation was more than 20 times higher than that, at $4,800 per person. Clearly Sablik says, currency is not only being used for trade, but also as a store of value. It stands to reason then, that the $100 bill would account for most of the total value of currency in circulation. 

More startling is that the demand for $100 bills has exceeded that for all other denominations, growing at an annual rate of about 8 percent since 1995, double that of most other notes. In 2017, the $100 bill passed the $1 denomination as the most widely circulated Federal Reserve note.

The bank acknowledges that much of the paper currency heads overseas. Ruth Judson, an economist at the Federal Reserve Board of Governors, said, “We think that the significance of foreign demand is unique to the dollar. Other currencies are also used outside their home countries, but as far as we can tell, the dollar has the largest share of notes held outside the country.” In 2017 she estimated that as much as 70 percent of all U.S. dollars were held outside the United States, and as much as 60 percent of all $100 notes. 

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