The $2 trillion nobody sees circulating

There are more $100 bills than $1 bills. The Federal Reserve counted 19.9 billion hundred-dollar notes at the end of 2025, compared with 15.2 billion greenbacks bearing George Washington’s portrait. Gathered in one place, all those Benjamin Franklins would weigh about 19,900 tonnes. Yet the largest denomination remains discreet in everyday American life. The contradiction disappears once payment is separated from storage: the $100 bill is less a checkout currency than a global reserve that can be held in the hand, hidden in a safe and carried offline.

A mountain of Franklins

On 31 December 2025, the Fed counted 56.6 billion US banknotes in circulation, across all denominations. Their total face value reached $2.3949 trillion. The $100 bill alone accounted for 19.9 billion pieces of paper and $1.9888 trillion.

Two rankings therefore coexist. By volume, the largest denomination represents about 35.2% of all notes. By value, it concentrates 83.0% of the stock. The 11 billion $20 bills familiar from ATMs are worth only $220.4 billion in aggregate. By value, physical dollars are overwhelmingly a matter of hundreds.

The official US currency education programme says that a banknote weighs approximately one gram. The hundreds therefore form a theoretical mass of 19,900 tonnes, dispersed among millions of holders.

Circulation means outside the Fed

In statistical terminology, “in circulation” means that a banknote is outside the vaults of the Federal Reserve and the Treasury. A Franklin stored for ten years in a private safe counts just as much as a note handed to a merchant this morning.

Distribution follows a simple balance-sheet movement. When a commercial bank requests $100 in cash from a Reserve Bank, its account at the Fed is debited by $100. On the Fed’s side, bank reserves decrease and currency in circulation increases by the same amount. Its total liabilities and assets do not change at the moment of the exchange.

The published stock therefore combines active means of payment, precautionary holdings and dormant savings. It measures neither the number of payments nor the velocity of circulation.

A map drawn from flows

A banknote transmits neither its location nor the identity of its holder. Travellers carry cash, and notes circulate between foreign countries without returning through the United States. No direct census of physical dollars held abroad exists.

To approximate this geography, Federal Reserve economist Ruth Judson combines international shipments by major banknote dealers, seasonality, a comparison with Canada and currency-demand models. Her study published in 2024 applies these methods through the end of 2022.

The results produce a range: about 40% to 75% of all denominations and 60% to 70% of $100 bills may be held abroad. The central estimate is close to 65% for hundreds.

Applied to the stock at the end of 2025, this range would place between $1.19 trillion and $1.39 trillion in $100 bills outside the United States. This is an order of magnitude, because the estimated geographic distribution ends in 2022.

This physical layer complements our analysis of de-dollarisation. It differs from eurodollars, which are bank deposits and loans created outside the United States. A banknote is a Fed liability; a eurodollar is a claim on a bank.

The crisis dollar

When local currency depreciates or banks command little trust, a globally recognised banknote offers a liquid, portable reserve that works offline. The Fed links foreign demand in particular to economic and political uncertainty.

Judson’s study finds accelerations after the fall of the Soviet bloc, during Latin American crises, after Lehman Brothers and during the pandemic. Once the physical dollar becomes established in an economy, it tends to receive fresh inflows during the next crisis.

The Federal Reserve Bank of Atlanta’s 2025 survey meanwhile shows that the share of consumers who had paid in cash during the previous 30 days fell from 83% in 2024 to 81% in 2025. Small denominations serve domestic transactions; hundreds say more about saving and foreign demand.

The Fed’s free liability

A $100 bill is a Federal Reserve liability to its holder. It pays no interest, has no maturity and remains in circulation for as long as the public wants to hold it.

On the other side, the Fed holds interest-bearing assets, mainly Treasury securities and MBS. It says these assets earn interest and that its residual net earnings are normally remitted to the Treasury after expenses. This is seigniorage: an interest-bearing asset financed in part by non-interest-bearing currency.

The foreign holder is therefore not lending directly to the Treasury. A bank withdrawing a note first converts reserves into cash; no additional Treasury security is automatically purchased. The note reduces the Fed’s funding cost compared with interest-bearing reserves.

Our investigation into the digital euro asks the same debtor question. A deposit is a claim on a bank; a banknote is a direct claim on the central bank.

Seigniorage under high interest rates

The rest of the balance sheet can erase this advantage. The Fed bought low-yielding securities before raising rates, then paid interest on bank reserves at rates that sometimes exceeded the returns on those securities. The cost of these liabilities can absorb the income from the assets.

In July 2026, the Fed’s Monetary Policy Report put the accumulated deferred asset, recorded when income no longer covered expenses, at about $236 billion. Some Reserve Banks had resumed roughly $6 billion of remittances to the Treasury; the others still had to extinguish their cumulative shortfall.

Replacing $100 of interest-bearing reserves with $100 of cash still reduces the interest expense. Our analysis of the deferred bill describes the other side of this power: supplying the world with sought-after, low-yielding liabilities.

Cash’s grey area

The anonymity that protects savers also protects illicit money. In its 2024 National Money Laundering Risk Assessment, the US Treasury says physical dollars remain attractive to criminal organisations because of their stability, acceptance and anonymity. Bulk cash smuggling remains a documented method for moving and laundering criminal proceeds.

This finding cannot divide foreign banknote holdings among savings, the informal economy, tax fraud and crime. Seizures count only detected flows, and the models estimate a location, never the holder’s motive.

The same property explains both legitimate and criminal uses: a banknote changes hands without a central register of its successive owners.

The world’s offline reserve

The $2 trillion performs a function poorly described by payment statistics: holding a claim on the US central bank outside a bank, an electrical network and a local currency.

This physical reserve forms a rudimentary and robust layer of the global monetary system. Digital payments and demand for paper currency are growing in different places and for different uses.

The digital dollar dominates global payments. The $100 bill dominates another market: trust that people prefer to hold in their hands.

Sources

1. Federal Reserve, Currency in Circulation: Volume and Currency in Circulation: Value, tables for 31 December 2025 published in March 2026.
2. U.S. Currency Education Program, Currency Facts: approximate weight of a banknote and general order of magnitude for foreign holdings.
3. Ruth Judson, Federal Reserve, Demand for U.S. Banknotes at Home and Abroad: A Post-Covid Update, IFDP 1387, March 2024: methods, flows, crises and foreign-holding ranges through the end of 2022.
4. Federal Reserve, Currency and Coin Services and Federal Reserve Liabilities: banknote distribution, balance-sheet entries, corresponding assets and Treasury remittances.
5. Federal Reserve Bank of Atlanta, 2025 Survey and Diary of Consumer Payment Choice, June 2026: decline in reported use of paper payment methods.
6. Federal Reserve, Monetary Policy Report, July 2026: consolidated deferred asset and partial resumption of Treasury remittances.
7. US Department of the Treasury, 2024 National Money Laundering Risk Assessment, pages 43 to 47: cash, anonymity and cross-border transport of illicit proceeds.

Limitations

The location of US banknotes is not directly observed. The ranges rely on indirect methods and different assumptions; their convergence does not eliminate uncertainty. Applying proportions estimated at the end of 2022 to the 2025 stock is an illustrative scenario. The stock in circulation measures neither payment frequency nor the number of owners. Finally, income attributable to banknotes cannot be calculated by multiplying their value by a policy rate: it depends on the full composition of the Fed’s balance sheet, the yield on its assets, the cost of its other liabilities and its expenses.

Data cut-off: 16 August 2026. This is not investment advice.