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Data from the Reserve Bank of Australia (RBA) shows that $50 and $100 banknotes now comprise 73% of banknotes in circulation, and 94% by value.
The RBA adds that demand for lower-value banknotes has been ‘subdued’ during the COVID-19 pandemic. The total value of Australian banknotes in circulation has risen to nearly $100 billion since the start of the pandemic, and the RBA estimates that Australians are storing between $50 billion and $75 billion of this amount in cash rather than in financial institutions.
The RBA also concedes that low interest rates may be a key driver of this “hoarding”. The trend may also reflect the strength of the black economy.
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About the author
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.
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