Despite declining everyday cash use by Americans, the volume of physical dollars in circulation has consistently doubled every decade, predominantly fueled by $100 bills. Currently, nearly 20 billion $100 bills are in existence, and the Federal Reserve estimates that the majority of these circulate outside the U.S., often held by foreign individuals or entities.
Experts like Oliver Bullough, an author on financial crimes, argue that this demand is largely due to criminal use. High-denomination bills, particularly $100 notes, are favored by drug dealers, arms smugglers, people traffickers, and money launderers because they enable the movement of significant value in a compact space, offer anonymity, and lack transaction records, making them ideal for evading detection by authorities. The value of U.S. dollar banknotes in circulation hit a record high of $2.345 trillion in April 2024.
Economist Ken Rogoff points out that while the U.S. government benefits from an interest-free loan through the issuance of these notes, this gain is significantly overshadowed by the estimated $1 trillion annual loss from tax evasion. Criminals, including tax dodgers, prefer cash to avoid reporting income and make enforcement challenging. The ease of concealing and transporting large amounts of cash, even when compared to cryptocurrencies which offer their own form of anonymity, makes $100 bills a persistent tool for illicit activities. Bullough suggests that cash and crypto are often used in tandem by criminals, leveraging the street-level acceptance of cash and the international convenience of crypto.
Eliminating $100 bills, or even reducing the denominations, would force criminals to transport five times the volume and weight of cash for the same value, making their operations significantly more difficult and increasing the likelihood of detection. Such a measure would also boost tax collections and simplify law enforcement efforts against financial crimes. Both Rogoff and Bullough advocate for discontinuing the printing of $100 bills, believing it would be the most effective action the U.S. government could take to combat financial crime.
