Worried Australians have added $50 notes to the items they are stockpiling during the coronavirus pandemic.
The cash grab is so significant, the stock of banknotes on issue surged to a record high $94 billion in July from $83 billion in February.
The $50 note is the preferred option for those stockpiling cash.Credit:Dominic Lorrimer
The jump was described as paradoxical by Reserve Bank of Australia governor Philip Lowe, who noted the extra notes were in circulation despite a spike in electronic payments such as tap-and-go.
"Some people seem to be wanting to keep some extra money at home," Dr Lowe said on Friday. "We have met this extra demand despite our main storage vault being located in one of the coronavirus hotspots in Melbourne."
The $50 is the note of choice for those keeping cash under the mattress, with 143 million more on issue in July than February. There are now $46.4 billion worth of "pineapples" around, compared to fewer than $40 billion at the start of the year.
But if your wallet has fewer $10 and $5 notes in it you're in good company, with cafes and restaurants in some areas refusing cash payments. There were $1 billion of $5 notes on issue in July, down from $1.1 billion before the pandemic began. There are now just under $1.4 billion of $10 notes in circulation.
The value of $20 notes on issue increased slightly to $3.7 billion in July while the value of $100 notes surged more than 9 per cent to $41.5 billion.
There are now 36 $50 notes and 16 $100 bills for every man, woman and child.
The temptation to stockpile cash pre-dates the pandemic, though the virus has clearly increased the urge.
The RBA pointed out bank note circulation was at record highs in 2018-19 despite a rise in consumers paying electronically. Over that year, the value of banknotes in circulation increased by 6 per cent to $80 billion, which was slightly above average.
While some of these notes might be used for "shadow-economy transactions", which includes everything from drug deals to cash-in-hand wages, the RBA estimates this contributes modestly to the overall figure. Instead, it is more likely people were using them as a bit of an insurance policy at this point as well.
"Ongoing growth in circulation appears to reflect growing use of banknotes as a store of value, with Reserve Bank estimates suggesting that roughly half to three-quarters of outstanding banknotes, by value, are used for this purpose," previous RBA research found.
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Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.