The Location of U.S. Currency: How Much Is Abroad?

Abstract

Federal Reserve bank notes are widely used outside the United States. Knowledge of how much U.S. currency is abroad is important for a variety of reasons, but currency movements are notoriously difficult to measure, and estimates of the foreign component of currency stocks and flows have been subject to a great deal of speculation and uncertainty. This article brings together several new methods and data sources to narrow the range of that uncertainty. The authors estimate that about $200 billion-$250 billion of U.S. currency was abroad at the end of 1995, or more than half the roughly $375 billion then in circulation outside of banks. Moreover, growth in foreign demand for U.S. currency--especially for hundred-dollar bills ($100s)--has been far stronger than growth in U.S. demand. On average, over the 1990s, the currency stock abroad has been growing at about three times the rate of growth of the domestic stock.