US$100 Bill on the Rise
IMF Blog, July 25, 2019
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Bibliographic details
- Authors: The Editors
- Published: July 25, 2019
Overview
- Publication: US$100 Bill on the Rise
- Author: The Editors
- Date: July 25, 2019
- Format: Chart of the Week / Blog post summarizing findings from IMF’s Finance & Development magazine
Key findings
- The $100 bill recently overtook the $1 bill in circulation volume for the first time in history.
- The volume of $100 bills is roughly doubling since the global financial crisis.
- Nearly 80 percent of $100 bills are held abroad, according to the Federal Reserve Bank of Chicago.
- More than 60 percent of all US bills are overseas, up from roughly 30 percent in 1980.
Explanations and analysis offered in the piece
- Geopolitical instability may be driving the surge in $100 bills; overseas demand for US dollars is “likely driven by its status as a safe asset,” according to Fed economist Ruth Judson (quoted from the Richmond Fed’s Econ Focus, 2018).
- Historical pattern: international demand for US dollars increased over the 1990s and into the early 2000s, then stabilized or declined after the 2002 debut of the cash euro, with demand declining until late 2008 when the global financial crisis triggered renewed demand for US banknotes (based on a 2017 paper by Ruth Judson).
- Kenneth Rogoff (Harvard University) links big banknotes to illicit activity: “Worldwide, high-value currency notes are mainly used to avoid taxes and regulation, and for illegal activity.”
- Rogoff also notes another contributing factor: “Underground demand for paper currency has been surely rising in part because interest rates and inflation are exceptionally low.”
- Rogoff suggests the dollar’s role as the dominant international reserve currency may explain why the $100 bill, specifically, has seen such strong demand.
Notable quotations from the article
- “The most valuable banknote in the United States became the most widely circulated.”
- “Overseas demand for US dollars is likely driven by its status as a safe asset.” — Ruth Judson
- “Worldwide, high-value currency notes are mainly used to avoid taxes and regulation, and for illegal activity… Apartments and houses in major cities all over the world are paid for with suitcases of cash every day, and it is not because the buyers are afraid of bank failures.” — Kenneth Rogoff
- “Underground demand for paper currency has been surely rising in part because interest rates and inflation are exceptionally low.” — Kenneth Rogoff
Context on the publication
- IMFBlog is a forum for the views of IMF staff and officials on pressing economic and policy issues.
- The IMF is an organization of 191 countries, based in Washington D.C., working to foster global monetary cooperation and financial stability.
- “The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.”
US$100 Bill on the Rise — The Editors, July 25, 2019.
