Higher Interest Rates Reduce Demand for Physical Dollar Bills
Rising interest rates have led to a decline in demand for physical U.S. dollar bills, according to Torsten Slok, chief economist at Apollo Global Management. Federal Reserve data on annual currency print orders show this trend clearly. As the federal funds rate has increased, individuals and institutions are favoring higher-yielding financial instruments over holding cash. This shift reflects broader economic behavior where liquidity is being redirected into interest-bearing assets rather than physical currency. The change in demand could have implications for monetary policy implementation and the role of physical money within the U.S. economy.
