The Australian government is setting up a taskforce to examine a possible ban on the $100 note, part of a crackdown on the country’s extensive cash economy.
In a statement, Kelly O'Dwyer Financial Services Minister said
There's nothing wrong with cash, the issue is when people don't declare it. The cash economy is worth 1.5 per cent of GDP, that's about $21 billion. If we can get a percentage of that, it's revenue owed to the Australian people
The amount that is likely to be targeted by the ban is estimated to be lesser than the projected amount missing due to corporate tax avoidance. O'Dwyer will be responsible for forming the taskforce that will examine the issue, seeking to learn from the experience of France and Sweden. France is planning to ban any cash payment over 1000 euros while in Sweden businesses dealing in cash need to use a certified cash register that is scrutinized by tax authorities.
The taskforce should submit its interim findings by the end of April 2017. However, should the taskforce be able to determine a precise amount of money that it will save, then it will most likely reveal the amount only during the budget session in May 2017. The move to consider the $100 ban is part of the government’s plan to address the cash-led black economy in the country.
The Reserve Bank of Australia, country’s central bank stated that despite the rising use of electronic payments, $100 notes are in wide circulation. Estimates suggest that there are 12 $100 notes per person in circulation as compared to the five that were in circulation per person 20 years ago. The $20 notes in circulation are six per person, broadly in line with the trend 20 years ago.
The $50 notes and $100 notes in Australia today account for around 92 per cent of total cash in the system. RBI’s report points out that the growth in $100 notes has been more than that of the $50 and $20 notes. Last year alone, the $100 notes circulation jumped by 9 percent, above its long term growth rate of 7 percent. In the same period, the $50 notes went up by 6 percent while the $20 notes went up by just 2 percent.
As per the report, the growth in high-denomination banknotes was higher than the growth of nominal income in the country. It attributed to the rise to factors such as shifts in the exchange rate and the use of the currency for storing wealth. O'Dwyer has also not ruled out the scrapping of the note saying the taskforce is free to examine all options.
