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Where’s the Money? An Investigation into the Whereabouts and Uses of Australian Banknotes

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  • Richard Finlay
  • Andrew Staib
  • Max Wakefield

Abstract

The Reserve Bank of Australia is the sole issuer and redeemer of Australian banknotes, but between issuance and destruction there is little information about where banknotes go or what they are used for. We estimate the whereabouts and uses of Australian banknotes, and find that 15–35 per cent are used to facilitate legitimate transactions, 4–7 per cent are used for transactions in the shadow economy, while the remainder are non‐transactional. The vast majority of non‐transactional banknotes are likely to be hoarded, and we estimate that 5–10 per cent of outstanding banknotes are lost or collected.

Suggested Citation

  • Richard Finlay & Andrew Staib & Max Wakefield, 2020. "Where’s the Money? An Investigation into the Whereabouts and Uses of Australian Banknotes," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(1), pages 22-34, March.
    • Handle: RePEc:bla:ausecr:v:53:y:2020:i:1:p:22-34
    DOI: 10.1111/1467-8462.12342
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    Cited by:

    1. James Caddy & Luc Delaney & Chay Fisher, 2020. "Consumer Payment Behaviour in Australia: Evidence from the 2019 Consumer Payments Survey," RBA Research Discussion Papers rdp2020-06, Reserve Bank of Australia.
    2. Anton Schautzer & Helmut Stix, 2019. "Approaching 20 years of euro cash in Austria: What has changed, and what’s next?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/19, pages 99-112.
    3. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand - Causal Evidence from the Staggered Introduction of Contactless Debit Cards," Working Papers on Finance 2002, University of St. Gallen, School of Finance.
    4. Luca Baldo & Elisa Bonifacio & Marco Brandi & Michelina Lo Russo & Gianluca Maddaloni & Andrea Nobili & Giorgia Rocco & Gabriele Sene & Massimo Valentini, 2021. "Inside the black box: tools for understanding cash circulation," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 7, Bank of Italy, Directorate General for Markets and Payment System.
    5. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand – Causal Evidence from the Staggered Introduction of Contactless Debit Cards (Martin Brown,Nicole Hentschel, Hannes Mettler, Helmut Stix)," Working Papers 230, Oesterreichische Nationalbank (Austrian Central Bank).

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