As the United States retires the penny, it should also reexamine larger cash denominations. The nickel is an obvious inefficiency costing 13.78 cents to produce, but the more consequential reform is retiring high-value paper notes. Phasing out the $100 and $50 bills would make tax evasion and many criminal enterprises harder to run, increase financial transparency, and impose only modest costs on lawful cash users.
The evidence is striking. The stock of U.S. banknotes in circulation has grown far faster than the economy. In recent years, currency in circulation rose by 7 percent annually, while GDP per capita grew at under 3 percent.
Even as everyday use of cash and checks declines, high-denomination notes — especially $100 bills — have surged. If 2023’s $100 bills were divided evenly, each American would hold about 56, up from 11 in 1997: for $50s, the per-person count rose from four to seven. Those trends suggest that large bills increasingly serve functions outside ordinary, legal transactions.
It has been argued for almost a decade by Kenneth Rogoff and others that removing $100 and $50 notes would deliver clear public-policy benefits. With fewer high-value notes available, large cash transactions become harder and costlier to execute. That raises the expected return to traceable payment methods, improves recordkeeping for businesses and households, and reduces the scope for underground economic activity. Over time, more commerce would flow through banks and electronic payments, improving tax compliance and potentially lowering enforcement costs.
There are costs to removing high-value notes to consider. The most important is lost seigniorage — the implicit revenue the government earns by issuing fiat money — because higher-value notes are cheaper to store and move relative to their face value. There are also modest welfare losses for people who prefer cash for lawful reasons. Those losses are likely concentrated and small: most everyday transactions use smaller denominations, and $20 bills and below would remain available for routine cash needs.
Practical concerns are manageable. Printing a $100 bill costs only a few cents, and fixed production costs are spread across billions of notes. Holders of large bills would have options: deposit them in banks, exchange them for smaller notes, or use other legal channels. To limit disruption, the Federal Reserve could phase the change in over several years: stop ordering new $100 and $50 notes, increase production of smaller denominations as needed, and announce a clear date after which existing $50s and $100s would no longer be legal tender.
Critics worry about capital flight and offshore storage of wealth. Those are legitimate concerns, but they do not outweigh the benefits. Offshore banking and asset diversification already exist for a variety of legal reasons; eliminating large domestic notes would not eliminate those practices but would reduce the ease with which large sums move anonymously in cash.
Technology and enforcement matter, too. Airport scanners and other detection tools are imperfect, and large bundles of cash can still be moved clandestinely. A medium suitcase can hold millions in $100 bills, and even if moving tens of millions is impractical, smaller but still substantial sums remain portable. That portability is precisely why high-denomination notes are attractive to criminals and tax evaders.
Some argue that cryptocurrencies will replace cash for illicit use. In practice, crypto adoption has been uneven: transactions can be traced on public ledgers, and law enforcement and tax authorities are increasingly devoting resources to tracking digital flows.
If holders of large notes migrate to crypto, those movements are often more traceable than anonymous cash transfers, especially if central banks or regulators expand digital monitoring and reporting. While sophisticated crypto money laundering operations are growing, they require a more refined and costly network than cash, and the elimination of large bills will decrease the options for illegal activities.
A phased elimination of $100 and $50 bills is feasible and proportionate. It would shift many high-value transactions into traceable channels, reduce opportunities for tax evasion and illicit trade, and preserve cash for everyday lawful use. The change would not be costless, but the public-safety and fiscal benefits make it a sensible reform.
The abolition of large-denomination U.S. currency is not a radical experiment; it is a pragmatic step toward a more transparent, accountable financial system.
Policymakers should act now to design a careful, phased transition that protects legitimate cash users while closing a major loophole exploited by criminals and tax cheats.