Trivia question for today: What denomination of US currency has the largest number of bills in circulation? Up until 2016, the correct answer was the $1 bill. Now, it's the $100 bill.

Here's the evidence from Tim Sablik in "Is Cash Still King?" written for Econ Focus from the Federal Reserve Bank of Richmond (Second Quarter 2018, pp. 18-21). Back in the 1990s and into the first decade of the 2000s, $1 bills were most common, with $20s in second place. (This ranking accurately represents my own wallet, for what it's worth!). But $100s have grown steadily and taken over first place.

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Indeed, the total value of US currency in circulation has been rising over time, but most of that gain in value is due to the rise in $100 bills.

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Clearly, there is a puzzle here. As Sablik points out, evidence from consumer surveys finds that cash is used for about 27% of transactions in the last decade or so, but mostly for small purchases. It seems unlikely that the number of $100 bills in circulation is about typical consumers making typical purchases. In round numbers, the 12 billion $100 bills in circulation divided by a US population of 325 million implies that on average, every person in the US has 37 $100 bills in their possession. The total amount of US cash in circulation works out to about $4,800 for every person in the US. (This does not accurately represent the contents of my wallet.)

The standard explanation is that a considerable amount of US currency is being used outside the US, both as a medium of exchange and as a store of value. Some proportion of that amount--no one really knows how much--is surely helping to facilitate illegal activities. There are ongoing proposals to eliminate large-denomination bills: Sablik points out that the European Union ended production of 500-euro notes in 2016.