Central Banking

RBA paper investigates post-crisis leap in currency demand

reserve-bank-of-australia

A research discussion paper, published by the Reserve Bank of Australia today, investigates why the demand for currency "increased abnormally quickly" following the collapse of Lehman Brothers in 2008.

By the end of the year, an additional A$5 billion worth of banknotes ($5.21 billion) – 12% of the banknotes in the system at the time – was on issue, the paper says.

The authors, Tom Cusbert and Thomas Rohling, say up to 80% of the increased demand may reflect an increase in precautionary holdings

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