Earlier this month, India decided to eliminate its two highest denomination bills in an effort to reduce counterfeiting and other concerns. The 1000 rupee note and the 500 rupee note, valued at about $15 and $7, respectively, will no longer be printed. Now, analysts from UBS are suggesting that Australia might consider a similar move, encouraging the country to eliminate the AUD$100 dollar bill from print and circulation.

Numerous Reasons for Elimination

UBS analyst Jonathan Mott spoke with journalists at The Australian this week, indicating that "concerns with the cash economy in Australia may not be as significant as in India," but that nonetheless there are plenty of reasons that the Australian central bank should consider cutting the AUD$100 bill.

Shift Toward Digital Payments

Among the primary reasons Mott cited are the fact that there are about 300 million of the highest denomination bill in circulation in the country of Australia, but that they are hardly ever seen. In fact, there are many more $100 notes in circulation than $5 notes, in terms of total count: almost three times as many, in fact. This means that more than 90% of Australian currency by value is denominated in either $50 or $100 bank notes. This supersaturation of high denomination bills seems increasingly useless in a world in which digital transactions are on the rise. Like many other countries around the world, Australia has seen cash use in everyday transactions declining in favor of any number of alternative payment methods, including credit card and digital payments. Mott cited statistics that ATM transactions are declining by a rate of about 3.4% per year since 2009 in the country, while credit card transactions have more than filled in the space, growing at a rate of 7.3% each year in the same time period.

Clamping Down on Crime

Analysts suggest that eliminating big bills from Australian circulation may also help to fight against crime. More and more, cash is seen as a means of transaction among criminals wishing to avoid a digital paper trail. Making it harder to collect large sums of money in cash by reducing the number of big bills in circulation would make such activity more difficult.

Among other benefits that UBS analysts see are the possibility of increased tax revenue as credit transactions increase, and reduced welfare fraud, which occasionally occurs when citizens collect welfare payments while simultaneously collecting cash on the side. A country-wide gathering of AUD$100 bills would also likely prompt Australians to deposit the bills in their banks, giving the banks a more stable base of cash. Though the Australian government has not responded yet, it seems likely that many Australians may not even notice that the big bills would be gone, since they are so rarely seen in daily life.

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