Editing Seigniorage (section)

=={{anchor|Overseas circulation}}International circulation==
The international circulation of banknotes is a profitable form of seigniorage. Although the cost of printing banknotes is minimal, the foreign entity must provide goods and services at the note's face value. The banknote is retained as a [[store of value]], since the entity values it more than the local currency. Foreign circulation generally involves large-value banknotes, and can be used for private transactions (some of which are [[Money laundering|illegal]]).

American currency has been circulating globally for most of the 20th century, and the amount of currency in circulation increased several-fold during [[World War II]]. Large-scale printing of the [[United States one-hundred-dollar bill]] began when the Soviet Union [[Dissolution of the Soviet Union|dissolved]] in 1991; production quadrupled, with the first trillion-dollar printing of the bill. At the end of 2008, U.S. currency in public circulation amounted to $824 billion and 76 percent of the currency supply was in the form of $100 bills (twenty $100 bills per U.S. citizen).<ref>{{cite journal|author=Edgar L. Feige|title= "New estimates of overseas U.S. currency holdings, the Underground economy and the "Tax Gap" Forthcoming in Crime, Law and Social Change|url=https://ideas.repec.org/p/pra/mprapa/19564.html|journal=Mpra Paper|date= September 2009}}</ref> The amount of U.S. currency circulating abroad is controversial. According to Porter and Judson,<ref>Porter and Judson, 1996, R. D. Porter and R. A. Judson, The location of U.S. currency: How much is abroad? Federal Reserve Bulletin 82 (1996), pp. 883–903</ref> 53 to 67 percent was overseas during the mid-1990s. Feige<ref>{{cite journal|date=1997|author=E. L. Feige|title=Revised estimates of the underground economy: Implications of U.S. currency held abroad, in O. Lippert and M. Walker (ed.) The Underground economy: Global evidence of its size and impact|journal=Mpra Paper |pages=151–208|url=https://ideas.repec.org/p/pra/mprapa/13805.html}}</ref> estimates that about 40 percent is abroad. In a New York Federal Reserve publication, Goldberg<ref>Goldberg, 2010, L. S. Goldberg, Is the International Role of the Dollar Changing? Federal Reserve Bank Of New York, Current Issues in Economics and Finance, 16(1) (2010) pp. 1–7.</ref> writes that "about 65 percent ($580 billion) of all banknotes are in circulation outside of the country". These figures are largely contradicted by Federal Reserve Board of Governors Flow of Funds statistics,<ref>{{cite web|url=https://www.federalreserve.gov/releases/z1/current/|title=The Fed - Financial Accounts of the United States - Z.1 - Current Release|website=Federalreserve.gov|access-date=14 January 2019}}</ref><ref>{{cite journal|author=Edgar L. Feige|title="New estimates of overseas U.S. currency holdings, the Underground economy and the "Tax Gap"|url=https://ideas.repec.org/p/pra/mprapa/19564.html|journal=Mpra Paper|date=September 2009}}</ref> which indicate that $313 billion (36.7 percent) of U.S. currency was held abroad at the end of March 2009. Feige calculates that since 1964, "the cumulative seigniorage earnings accruing to the U.S. by virtue of the currency held by foreigners amounted to $167–$185 billion and over the past two decades seigniorage revenues from foreigners have averaged $6–$7 billion dollars per year".<ref>{{Citation |last=Feige |first=Edgar L. |title=Overseas Holdings of U.S. Currency and the Underground Economy |date=1996 |work=Exploring the Underground Economy: Studies of Illegal and Unreported Activity |pages=5–62 |publisher=W.E. Upjohn Institute |doi=10.17848/9780880994279.ch2 |isbn=9780880994279 |doi-access=free }}</ref>

The American $100 bill has competition from the [[500 euro note|€500 note]], which facilitates the transport of larger amounts of money. One million dollars in $100 bills weighs 22 pounds (10&nbsp;kg), and it is difficult to carry this much money without a briefcase and physical security. The same amount in €500 notes would weigh less than three pounds (1.4&nbsp;kg), which could be dispersed in clothing and luggage without attracting attention or alerting security devices. In illegal operations, transporting currency is logistically more difficult than transporting cocaine because of its size and weight, and the ease of transporting its banknotes makes the euro attractive to Latin American drug cartels.<ref>{{cite news|url=http://edition.cnn.com/2009/WORLD/africa/09/21/africa.drug.cartels/index.html |title=Latin American drug cartels find home in West Africa | work=CNN | date=September 21, 2009}}</ref>

The [[Banknotes of the Swiss franc|Swiss 1,000-franc note]], worth slightly more than $1,000, is probably the only other banknote in circulation outside its home country. However, it does not have a significant advantage over the €500 note to the non-Swiss; there are 20 times as many €500 notes in circulation, and they are more widely recognized. As a [[reserve currency]], it makes up about 0.1% of the currency composition of official foreign-exchange reserves.{{citation needed|date=January 2019}}

Governments vary in their issuance of large banknotes; in August 2009, the number of [[Swiss franc|Fr.]] 1,000 notes in circulation was over three times the population of [[Switzerland]]. For comparison, the number of circulating £50 banknotes is slightly less than three times the population of the United Kingdom; the Fr. 1,000 franc note is worth about £600. The British government has been wary of large banknotes since the [[counterfeit]]ing [[Operation Bernhard]] during World War II, which caused the [[Bank of England]] to withdraw all notes larger than £5 from circulation. The bank did not reintroduce other denominations until the early 1960s (£10), 1970 (£20) and March 20, 1981 (£50).