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Cash hoarding: Where all the Aussie banknotes have gone

Male person's hands holding some Australian cash notes.
There is still a lot of cash in circulation in the Australian economy, but where is it? (Source: Getty)

A chart caught my eye this week that started me on the trail of the great Australian money mystery or, as I call it, the case of the missing cash.

According to the Reserve Bank of Australia (RBA), for every single person in Australia, there are 38 $50 notes. That’s a lot of cash, but here’s the rub, I have exactly none of them. Do you have my cash? No? So who does have all those banknotes?

A chart showing the number of Australian cash banknotes in circulation per capita.
(Source: supplied)

The RBA has been printing cash rapidly over the past few years but some of it has disappeared and is out of circulation. The RBA knows about the $50 notes that are in circulation because those are the notes that get spent at big shops, then go to banks, go back out into ATMs, and get spent again. But some of those notes are never seen at all. So, who has them?

Also by Jason Murphy:

The RBA chart above assumes the $50 notes are spread out evenly across the population - a simple average but one that’s not likely when it comes to cash when so many of us simply don’t use it anymore. In fact, money follows a 90/10 rule - where 10 per cent of the people are responsible for 90 per cent of something. The 90/10 rule predicts 90 per cent of us have 10 per cent of the banknotes between us, while 10 per cent of the people have 90 per cent of them.

What’s interesting is the 90/10 rule applies even among that 10 per cent. So, 9 per cent of people have 9 per cent of all the banknotes… but 1 per cent of people have 81 per cent of all the notes.

If we apply this rule to the population of Australia, it creates a situation like this:

  • 23 million people have four $50 notes on average - enough to put in your wallet

  • 2.6 million people have 31 $50 notes on average - a little envelope full in a drawer, maybe, in case of emergency

  • 260,000 people have 280 $50 notes on average - a fat envelope full ($14,000 worth). Perhaps these are pensioners with money stashed under the mattress, someone who is about to buy a car or has just sold one, and the tradies and hospitality workers who work for cash jobs

  • 26,000 people have 2,500 $50 notes - a fat A4 folder full of 50s, worth $126,000 More pensioners and tradies are in this group, plus perhaps people who don’t trust banks, survivalists, or people who really hate the Australian Tax Office

  • 2,600 people have 22,700 fifty dollar notes. That’s a small rolling suitcase full of pineapples, worth $1.1 million.

  • 260 people have 200,000 $50 notes each - a large car boot full of ‘pineapples’. By this point, I don’t even want to speculate on what these people do for work in case they come and get me

  • 26 people have 1.8 million $50 notes each, worth $92 million - a broom cupboard full of 50s, stacked as tall as a person

  • 3 people have 16.5 million $50 notes each, worth $827 million - a bedroom stuffed to the ceiling with money

If I had a bedroom full of $50 notes, I’d be paranoid. But, on the bright side, one thing I wouldn’t have to worry about with all that cash on my property is my house burning down. Fun fact: The RBA will replace any money you have lost with fresh ones - all under the damaged banknote program. But, if that's you, you will need to send in the evidence before they will hand over the fresh cash.

It really is fascinating what people have managed to do with their cash stashes.

A four-way composite image showing damage to various Australian banknote denominations.
Some examples of damaged banknotes sent in to the RBA. (Source: RBA)

Now, you might be thinking, “Well, the idea of that cash being stashed at home is a bit of an exaggeration because there’s money in ATMs, in shops, in casinos, in banks”.

That’s true, but even if there’s $50 million in cash at every casino, $500,000 at every bank branch and in every Armaguard van, $40,000 in every ATM, a few hundred in every cash register, it doesn’t put much of a dent in the amount of $50 notes out there. There’s $45 billion worth of $50 notes, and the above locations would account for 10-20 per cent, at most. And remember, $50 notes aren’t the only denomination.

Australia has far more $50 notes than we used to, as the next chart shows.

A graph showing the amount of $100 and $50 notes in circulation since 1984.
(Source: supplied)

We also have a lot of $100 notes, albeit about half as many as there are $50 notes. But $100 notes are circulated even less and these ones are rarely spotted out in the wild. In fact, according to the RBA, there is a good chance a lot of these $100 notes are overseas. And there’s a good explanation for that: if you’re flying out of Australia with cash, it makes sense to take the smallest number of notes you can.

In Europe, they have stopped printing the 500 euro note (the biggest of all the euro currency), because they figured only criminals were really getting much use out of it. Here in Australia, the RBA said it was committed to keeping cash going as long as we kept wanting to use it. However, inflation does mean the buying power of cash is shrinking.

This is the way cash will end - by becoming valueless. A $50 buys as much now as a $20 note did in the 1980s, and as much as the $5 note did in 1973.

The end of cash won’t be a big decision that happens overnight, it’s more likely to be just a slow fadeout.

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