“The Fed has long known most of the $100 bills aren’t in America. It doesn’t take great insight to realize they are being used to finance illicit activities,” Alan Blinder, Princeton University economist and a former vice chairman of the Federal Reserve, said in an interview.
It is concerns like these that last year prompted a global push against cash. Harvard economist Kenneth Rogoff’s book, “The Curse of Cash,” proposed phasing out $100 and $50 bills. Europe decided to phase out the €500 note.
Last December India moved to eliminate its 500- and 1,000-rupee bills. Countries including South Korea and Venezuela have withdrawn notes or coins in recent months.
But the push to get rid of cash is hitting speed bumps all over. India, for example, is already partly reintroducing its 500- and 1000-rupee bills after the government’s abrupt demonetization program drew sharp criticism for hurting its cash-dependent rural population.
The U.S. luckily has shown no inclination to pare back $100 notes. (Note: US$500 bills now sell for a premium on the collectors market)
“I’m very conscious of the $100 bill being the world’s reserve currency, and every central bank around the world has stacks of $100 bills where they used to have gold,” Treasury Secretary Jacob Lew said in an interview with The Wall Street Journal shortly before he left office in January.
One reason it’s a non-starter in the U.S.: About 8% of people don’t have a checking or savings account, making it all-but-impossible for them to participate in a cashless economy.
There are still a tremendous amount of people who live by the motto “cash is king”