As the fight against counterfeit money continues, updates to currency are consistently being done to ensure the authenticity of currency in circulation.
While these updates are usually limited to different designs and enhanced security features, sometimes these updates can be extended to phasing our certain bills in their entirety. This may be the fate which awaits the iconic $100 within the next coming years.
Why does currency get phased out?
There are various reasons why certain bills get phased out. Primarily due to security concerns, certain bills may get phased out due to counterfeiting worries. Other times, certain bills may not be practical to use or are not as in demand as other bills used by people.
It therefore may come as a surprise that that the $100 bill is being possibly phased out. As of 2023 data, the $100 bill is the most issued banknote with approximately 18.9 billion bills currently in circulation.
However, the $100 bill is the most frequently used bill in illicit activities such as money laundering and tax evasion.
Additionally, the $100 bill is also frequently used in counterfeit money operations seeing as it is the most popular form of cash used. By removing the $100 bill, it also decreases “cash hoarding” during periods of negative interest rates thereby monetary policy.
Looking towards a digital payments landscape
The possibility of the phasing out of the $100 bill also reflects a growing trend towards a cashless economy. Especially within a country like the U.S, the possibility of a completely cashless society is a large possibility.
Further, the growing influence of virtual currencies like Bitcoin also points towards a possibility of central banks to introduce these currencies alongside cash as an additional monetary option before phasing out cash altogether.
Further, as electronic payments become more common, transactions are easier to trace, potentially aiding law enforcement in their efforts to combat crime.
Currently, more than 60% of transactions are digital payments are conducted electronically, making the need for large cash denominations like the $100 bill more and more obsolete.
However, the journey towards a cashless economy is not without its challenges. Cashless transactions come with their own security risks, and cybercrime is getting more frequent and savvy itself.
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$100 bill elimination could have positive effects on the economy
Interestingly, the elimination of the $100 bill could have positive effects on the economy, specifically on monetary policy.
During periods of economic hardship, central banks may implement negative interest rates to encourage spending. By doing so, people are more likely to spend money if it is losing value in the bank.
However, the existence of high-denomination cash like $100 bills rather encourages individuals to withdraw large sums and store them.
Without access to such high-denomination bills, cash hoarding would become less feasible, giving central banks more control over the economy and ensuring that policies such as negative interest rates effectively boost spending and investment.
While it currently remains unconfirmed the future of the $100 bill, the conversation continues to grow whether or not the change will occur in the next few years. Regardless, 2025 is set to be a year of significant economic changes, particularly with the incoming new presidency of the Trump administration.
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These new expected developments both in terms of local and international economic policy will likely have far-reaching consequences for markets, businesses, and consumers alike, as policymakers weigh the potential for new economic approaches in response to evolving challenges.