Widely viewed as a safe asset, nearly 80% of the US notes are now held overseas
Federica Cocco
“A curious thing has happened,” the IMF observed in a blog post last week, noting that the $100 bill had overtaken the $1 bill in circulation for the first time.
The number of $100 bills has doubled since the global financial crisis. This climb has surprised some because of the march towards a cashless society, in which nearly a third of Americans use no cash at all on a weekly basis, Pew Research Center data show. Nearly 80 per cent of these bills are held overseas, according to the Federal Reserve Bank of Chicago.
Ruth Judson, an economist at the Fed board of governors, said the trend can be attributed, at least in part, to geopolitical instability. “Overseas demand for US dollars is likely driven by its status as a safe asset,” she said. “Cash demand, especially from other countries, increases in times of political and financial crisis.”
The IMF said it was “impossible to know for sure” where the greenbacks are held but cited turmoil-hit Venezuela as a prime example of a nation where holding US dollars was highly valued.
Other observers have mooted a rise in global corruption and criminal activity. Former Treasury secretary Lawrence Summers has called for the $100 note to be scrapped to frustrate illicit activities, a move reminiscent of the European Central Bank’s decision in 2016 to stop producing €500 notes with the same aim. But the cost of replacing the $100 note with more $50s and the cut in seigniorage, the profits a government makes from issuing currency, have hindered efforts.
0 comments:
Publicar un comentario