The Reserve Bank Reckons We’ve All Misplaced As Much As \$8 Billion In Cash

Time to check under your couch and the couches of everyone you know: the Reserve Bank of Australia has released a report estimating that somewhere \$4 billion and \$8 billion of the cash in circulation is completely unaccounted for.

The report Where’s the Money‽ An Investigation into the Whereabouts and Uses of Australian Banknotes (yes, that is a single-character interrobang) is an attempt at estimating just what is happening with the roughly \$76 billion in banknotes currently at large. Obviously, the nature of paper currency means you can’t accurately track where the money is and what is being used for, which means researchers have to use some pretty novel techniques to figure those numbers out.

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For instance: one method they used to try and estimate the value of cash money that was being hoarded by Australians was by looking at the value of money claimed under their Damaged Notes Policy. They then took any claim for an amount greater than \$300 as evidence of hoarding. They note, though, that this isn’t a particularly reliable method:

Fire-affected households are unlikely to be representative of the population, with factors such as the wealth and occupation of the inhabitants of the dwelling, as well as the geographic location, likely to influence the probability of a fire.

For the purposes of estimating how much cash was just straight up lost, the researchers looked at the rate of loss from back before we switched to plastic notes. With paper notes being removed from circulation by banks since the 90s, the researchers made the assumption that the paper money that now remains unaccounted for is just straight-up lost, then used the data from that to figure out an “implied annual loss rate” that could then be applied to plastic currency. (They do note that the rate might not hold the same between paper and polymer notes, as the paper ones were much likely to just disintegrate.)

One interesting thing about the data is that the loss rate for denominations under \$50 increases as the value of the money decreases — people are much more likely to lose small value cash than they are bigger notes, which makes sense. But that relationship flips for \$50 and \$100 notes, something the researchers attribute to “past hoarding of these denominations, with some earlier-hoarded banknotes either still in known-about hoards or otherwise forgotten about and genuinely lost“.

From their calculations, they estimate that the percentage of circulated banknotes “lost, destroyed, forgotten about, or … sitting in numismatic collections” is somewhere between 5% and 10% of the \$76 billion total — which is as low as \$4 billion or as high as \$8 billion.

Either way, it’s a lotta cash!

You can read the full report here if you love numbers and words like ‘numismatic’.