## Striking the Right Note

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**Canonical URL:** [Striking the Right Note](https://www.imf.org/-/media/files/publications/fandd/article/2018/june/currency.pdf)

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### Overview of global banknote diversity
- Money has taken many historical forms, from "strings of shells in the Solomon Islands" to "large stone disks on the Micronesian isle of Yap" to "wheels of Parmigiano-Reggiano cheese in Italy."
- Among the IMF's 189 member countries there are 136 unique national currencies and four currency unions.
- Modern banknotes serve as artistic expressions of national sovereignty, featuring famous authors and activists, local wildlife, and national landmarks.
- Banknotes are rectangular and predominantly wider than tall; examples: Swiss francs tend to be very slender, British pounds and Kenyan shillings are more square.

### Technical characteristics and nominal value
- Banknotes function as a unit of measure, a store of value, and a medium of exchange.
- Paper bills ("fiat" money) have no intrinsic value; their worth is determined by supply and demand and by government decree as legal tender.
- Central banks set the largest note in circulation; its nominal value is signaled by the number of zeros.
- Current extremes in largest bills in circulation:
  - 20 Bahrain dinars
  - 500,000 Vietnamese dong
- Historical hyperinflation examples:
  - 500 billion Yugoslav dinar bill in 1991
  - 100 trillion Zimbabwe dollar bill in 2009
- Commonly, "a hundred units of currency (for example, 100 US dollars) is most commonly the highest available banknote in each country."

### Size and real value examples
- Smallest and largest banknote sizes in the study:
  - Malawian kwacha: about 87 percent the size of the US dollar bill (smallest)
  - Brunei dollar and Singapore dollar: each with a total area of more than 150 percent of the US dollar bill (largest)
- Average largest banknote in circulation across countries is equivalent to 33 US dollars.
- Purchasing-power contrasts using largest notes:
  - Three 100 South Sudanese pound notes buy a cup of coffee.
  - Two 10,000 Brunei dollar notes buy a 2018 Toyota Yaris sedan.

### Infographic figures on how much $1 million fills a briefcase (based on largest denomination)
- Brunei or Singapore 10,000-dollar bills: 70%
- Emirati 1,000-dirham notes: 28%
- US 100-dollar bills: 15%
- Swiss 1,000-franc notes: 8%

### Trends and implications
- The "real value (proxied here by its worth in US dollars) is where the rubber hits the road"—highlighting large disparities in purchasing power of largest banknotes across countries.
- Cash use faces a potential decline as digital currencies and online transactions grow: "the future of paper money may be in jeopardy."
- Possible future: countries may design and issue "banknotes of the virtual kind, embedded with even richer features" though for now "paper banknotes will retain an undeniable appeal."

*Tadeusz Galeza and James Chan, "Striking the Right Note," Finance & Development, June 2018.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2018/june/currency.pdf_