Calculating Cash Use in Australia

The Reserve Bank of Australia has published an article in its Bulletin about cash usage ¹. The article starts by explaining that transactional demand is hard to calculate and then goes on to use four different methods to establish a range of estimates – see below 

The RBA’s data shows demand for $5, $10 and $20 notes has been growing at a rate of about one per cent per annum since 2007. While demand for these transaction notes has crept up, demand for the store of value notes, the $50 and $100, has risen by about 5% over this timespan.

When the results of the four methods are put together, a range for hoarding of 55% - 80% results. Five to nine per cent was thought to be lost, destroyed or forgotten about, seven to 11% used in the shadow economy and 9% to 26% used for legitimate transactions. See below for more on the shadow economy.