Bulletin – September Quarter 2015 The Life of Australian Banknotes Abstract
An assessment of the likely life of a banknote is an important input to a currency issuer's planning. Without accurate predictions of banknote life, there is the potential to incur the economic costs of producing and storing excess banknotes or, conversely, in an extreme case, of not being able to meet the public's demand. The life of a banknote, however, is not directly observed and must be estimated. This article discusses some traditional measures of banknote life and provides some alternative estimates using ‘survival’ modelling.