bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Fairfax Media

By Clancy Yeates
 
Getting rid of AU$100 notes may be ineffective in disrupting crime, because AU$50 notes are more commonly used in illegal cash transactions, Australia’s Reserve Bank says in a paper.
After an inquiry this week kicked off into the cash economy, including the future of the AU$100 note, RBA researchers on Thursday said there could be legitimate reasons for the strong lift in demand for cash in recent years.
Some countries overseas, most recently India, are phasing out high-denomination bank notes as part of a crackdown on tax evasion, leading to speculation Australia might do the same, as consumers here embrace digital payments.
Against this backdrop, an article in the RBA’s December-quarter Bulletin acknowledged that one potential source of demand for cash was illegal activity, and the desire to hide income from the tax man.
It was impossible to say with any precision how much cash was being used in the underground economy, the paper said. However, key crime and money laundering agencies had told the RBA AU$50 bills were generally the note of choice for criminals.
“Liaison with AUSTRAC (Australian Transaction Reports and Analysis Centre) and the Australian Crime Commission suggests that it is the AU$50 denomination - rather than the AU$100 - that tends to be preferred by criminal elements because of its ubiquitous use in legitimate transactions,” the paper said.
“This suggests that to the extent that the AU$100 banknote is being used for nefarious purposes, any phase-out may not be particularly disruptive to those engaged in such activities.”
The number of AU$100 notes on issue has surged in recent years even though they are infrequently used in transactions. The number of AU$100 notes grew by 9 per cent last year, the fastest increase of any denomination, RBA figures show.
As cash is gradually displaced by electronic payments, overseas economists such as Kenneth Rogoff have called for high-value bank notes to be scrapped as a way to curb organised crime.
UBS analyst Jonathan Mott last month said removing large denomination bank notes would be “good for the economy and good for the banks”.

Yet the RBA article argued the current mix of bank note denominations was serving the community well, pointing to legitimate reasons for the recent strong demand for cash.
The global financial crisis had triggered higher demand for cash from people as a precaution, it said. Very low interest rates on bank deposits also meant there was less of a cost in interest forgone in deciding to hold cash.
Foreign demand for Australian cash might have also increased in recent years, as falls in the Australian dollar tended to boost demand for bank notes from tourists and foreign students, it said.
As well, it said AU$100 notes were used in a “non-negligible” share of legitimate transactions.
Up to 5 per cent of the notes banked by retailers and supermarkets were AU$100 notes, it said, while at post offices it was 10 per cent, probably because of household bill payments.
It also said having AU$100 as the highest denomination note was similar to the most valuable bank note in other countries including New Zealand, Canada, Japan and the United Kingdom.
The RBA is the issuer of Australia’s currency. It makes a share of its profits from creating money, because it in effect sells notes and coins to banks at their face value, even though the currency costs much less than that to produce.
Originally published in Sydney Morning Herald.


No more free rides: Australia orders Facebook, Google to share advertising revenue from news articles with media organisations

Chinese-Australian billionaire Chau Chak Wing wins defamation case against Sydney newspaper which alleged he helped bribe UN official

Body’s ‘clever’ protein could stop HIV in its tracks

Aussie dairy farmers call for labelling crackdown on the word ‘milk’

Aussie criminals prefer AU$50 notes, not AU$100s

Overseas economists have called for high-value bank notes to be scrapped. Photo: Bloomberg

$50 notes are more commonly used in illegal cash transactions. Photo: SMH

News

Asia

Australasia

Australia’s Reserve Bank says that AU$50 notes are more in demand in illegal cash transactions, which could render the termination of AU$100 notes redundant


Aussie criminals prefer AU$50 notes, not AU$100s

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Australia’s Reserve Bank says that AU$50 notes are more in demand in illegal cash transactions, which could render the termination of AU$100 notes redundant

Australia’s Reserve Bank says that AU$50 notes are more in demand in illegal cash transactions, which could render the termination of AU$100 notes redundant