Although it plays a significant role in the global economy, economists and policymakers have debated discontinuing the $100 bill in recent years.
While the U.S. government has yet to commit to removing the $100 bill from circulation, the idea remains a topic of interest for various reasons, including the economic consequences and the government’s eventual shift toward Central Bank Digital Currencies (CBDCs).
The $100 Bill Debate: Why Discontinue It?
Although rarely used in everyday transactions, $100 bills remain widely circulated.
The Federal Reserve says that there are more $100 bills in circulation than $1 bills. However, only a fraction of those bills are in the hands of Americans. Most are overseas in Central Bank reserves, circulating in countries that use the dollar as a currency, and where people use it to hedge against currency instability.
Proponents of discontinuing the $100 bill, such as Harvard economist Kenneth Rogoff, argue that criminals primarily use large-denomination bills like the $100 note for illicit activities, including tax evasion, money laundering, and the financing of terrorism.
Rogoff contends that eliminating high-value bills could curb the underground economy and bring more transactions into the formal banking system, where they can be taxed and regulated.
However, these illicit activities are those performed at scale by large criminal enterprises within the existing financial and banking system, as we learned from the Panama Papers that were released in 2012.
Critics of the $100 bill also point to the “denomination effect,” which suggests that people are less likely to spend larger denominations, such as $100 bills, than smaller ones, like $20s.
Many of these leading proponents of discontinuing the $100 note, including Rogoff, also largely favor more regulations, reduced privacy, and the push for a digital dollar. These as strawman arguments that downplay deeper motivations.
Other Motives Behind Discontuing the $100 Bill
As cash transactions become less common and experts expound on discontinuing the $100 bill, the introduction of CBDC will give the government oversight into your purchases like never before.
The agenda hidden behind the curtain is the push to introduce CBDCs managed, and controlled by the Federal Reserve at the cost of personal privacy.
Combining the programability of CBDCs with a social credit system like those in China, raises the possibility of a future where your person financial freedoms are tied to how closely you follow the narrative.
Many are troubled at the thought of the government could use CBDCs to manipulate citizens’ spending behavior and enforce social policies.
Is Discontinuation Practical?
The $100 bill is designed to be durable, and each note lasts up to 23 years in circulation. By contrast, smaller denominations wear out rapidly and need to be replaced frequently.
Additionally, eliminating the $100 bill will likely accelerate the push for criminal enterprises to use alternative methods like crypto for illicit activities, which would only partially address the problem.
Removing the $100 bill could also increase the demand for smaller denominations, increasing printing and maintenance costs.
Whether or not the $100 bill is ultimately discontinued, the transition to digital currencies raises important questions about privacy, government control, and the future of money.
