Is the Kermit on its way out?
The Reserve Bank says there is currently more than $75 billion worth of Australian cash in circulation. Nearly half of that is stored in $100 bills sometimes referred to as ‘kermits’ due to their green colour.
An issue raised recently is that these high denomination notes are being used by criminals such as drug dealers and human traffickers.
Should Australia ‘ditch the kermit’?
University of New South Wales economist Richard Holden is in favour. In a recent interview he said:
"They're a vehicle for tax evasion and they're a vehicle for illegal activities".
"One of the main reasons people hold $100 bills is to hide them from tax authorities."
"Some very credible estimates said if you got rid of all cash in Australia you would boost tax revenues by about $6 billion a year or more. So if you got rid of the $100 bill you might boost revenues by half of that."
The Indian Government is withdrawing its two biggest denominations in order to deal with the black economy and starve criminals and tax evaders of funds.