Research Discussion Paper – RDP 2018-12 Where's the Money‽ An Investigation into the Whereabouts and Uses of Australian Banknotes


The Reserve Bank of Australia is the sole issuer and redeemer of Australian banknotes. This means that we know exactly how many banknotes have ever been printed and issued to the public, and how many banknotes, at the end of their life, have been returned to the Reserve Bank and destroyed. Between issuance and destruction, however, there is little public information about where banknotes go or what they are used for. Such information would be of interest for a number of reasons, including to aid in forecasting future banknote demand, and to assess the extent to which banknotes are used to facilitate illegal activities or avoid tax obligations. To address this we use a range of techniques to estimate the whereabouts and uses of Australian banknotes. The techniques that we employ suggest that, of total outstanding banknotes: 15–35 per cent are used to facilitate legitimate transactions; roughly half to three-quarters are hoarded as a store of wealth or for other purposes, of which we can allocate 10–20 percentage points to domestic hoarding and up to 15 percentage points to international hoarding; 4–8 per cent are used in the shadow economy; and 5–10 per cent are lost.