One would have thought the COVID-19 pandemic and the associated restriction on cash payments would have caused the number and value of banknotes in circulation to fall.
Not so according to the Reserve Bank of Australia (RBA), which this week advised that the total value of banknotes in circulation rose by $1.6 billion in December, while $14.6 billion in new notes were added to the economy in 2020, equating to an extra $584.2 per Australian. That took the total value of notes in circulation to $98.6 billion.
CommSec economist Craig James stated that many of the new notes are being hoarded in the same way that people like to hoard newspaper, while the $50 note saw its biggest growth since 2008 in 2020, with 23.8% more of them in circulation:
In uncertain economic times, Aussies have shown a tendency to hold more physical cash. And this time is no different. There is currently almost $100 billion of bank notes in circulation, around $3,800 on average for every Aussie. And the majority of the cash in the economy is in $50 and $100 notes. The value of $50 notes is up almost 24 per cent on the year with the value of $100 notes up over 13 per cent…
The amount of bank notes in circulation rose by $1.6 billion in December or 1.7 per cent to a record $98.6 billion. The value of bank notes is up by 17.4 per cent over the year.
The amount of $50 notes in circulation rose by $1.1 billion or 2.3 per cent in December to stand 23.8 per cent higher than a year ago – the fastest annual growth in 12 years.
The amount of $100 notes in circulation rose by $346.2 million in December or 0.8 per cent. Annual growth has slowed from a 29-year high of 15.8 per cent in October to 13.6 per cent in December.
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There must be a heck of a lot of hoarding, organised crime and tax avoidance going on.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
