A funny thing happened on the way to a world of cryptocurrencies and mobile payments. Cash became more popular than ever. The main reason? The one hundred dollar bill.
In 2017, for the first time ever, the one hundred dollar bill became the most popular US bill in circulation, beating out the one dollar bill. It is quite the turn of events for Benjamin Franklin-faced banknote. Just 10 years ago, it was less common than both the $20 and the $1.
The share of US dollars in circulation as a share of GDP rose from about 6% in 2010 to 9% in 2018, according to the Federal Reserve. Increased use of $100 bills has been the primary driver.
Why are hundreds so much more common these days? It’s not because more people are using them for day-to-day spending. The vast majority of cash transactions are still made in small bills.
According to a recent report from the Federal Reserve Bank of Richmond, the $100 bill is on the rise as a form of savings. With low inflation and a financial crisis still relatively fresh in people’s memories, more savers than ever are choosing to keep some of their wealth in large-denomination banknotes. And it’s not just Americans. The Fed researchers suggest that people across the world are stashing hundreds under their beds as an alternative in case their local currency takes a dive.
Although the headlines may make it seem like cash is dying, it’s actually flourishing. And as that famous financial commentator, Puff Daddy, once put it, “It’s all about the Benjamins, baby.”