How Much US Currency is Held in Foreign Countries

The US dollar is a widely held currency around the world, with an estimated $6.5 trillion held in foreign countries, according to the US Department of the Treasury.

This staggering amount is a reflection of the dollar's status as a global reserve currency, with many countries holding large reserves of US currency as a safe-haven asset.

The largest holders of US currency are China, Japan, and the UK, with an estimated $1.2 trillion, $1.1 trillion, and $430 billion respectively, held in their central banks.

These countries hold US currency to facilitate international trade and investment, as well as to diversify their foreign exchange reserves.

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Around 48% of U.S. cash is estimated to circulate outside of the U.S. border, based on the flow of banknotes into and out of New York, Miami, and LA cash offices.

This is a staggering figure, and it's likely that a significant portion of this cash is held by non-US persons. In fact, an estimated 45% of all Federal Reserve Notes are held by non-US persons, worth around $1.1 trillion.

Studies have shown that more than 60% of all US bills and nearly 80% of $100 bills are held overseas, which would total up to $1.5 trillion in $100 bills alone.

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The Federal Reserve has 28 cash offices distributed around the U.S. that dispense new cash and take in deposits of unwanted cash. One of these offices, New York, is known to accept substantial deposits of incoming foreign banknotes from banks.

The New York, Miami, and LA cash offices are also known to accept withdrawals of banknotes for export internationally. This provides a way to estimate the amount of banknotes overseas.

Assuming that all banknotes flowing into and leaving New York, Miami, and LA are to or from foreign destinations, those flows can be summed up to arrive at a stock of banknotes held outside of the U.S. Around 48% of U.S. cash circulates outside of the border.

The Federal Reserve updates this statistic each quarter and includes it in section L.204 of the Flow of Funds Accounts. It also appears on FRED, the Fed's free online data retrieval tool.

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Cash is not where you think it is. The total amount of US currency, encompassing both coins and notes, currently stands at a staggering $2.3 trillion.

That's a per capita figure of $6,998 for every man, woman, and child in the United States. This means a typical five-person family would possess an astounding $35,000 in cold, hard cash.

Around $100 billion is kept in bank vaults, while small and medium-sized enterprises hold, on average, $12,000 in cash. This adds up to an estimated $400 billion.

There are also around 450,000 ATMs in the US, with each holding, on average, around $20,000 in cash, or $9 billion in total.

Foreign exchange reserves are a vital component of a country's financial stability, and some nations hold massive amounts of US currency in reserve.

China is the world's largest holder of foreign exchange reserves, with over $3 trillion in assets held in foreign currency, mostly in the US dollar.

This arrangement makes international trade easier, as most trading takes place using the US dollar. I've seen firsthand how this facilitates global commerce, making it simpler for businesses to operate across borders.

The US foreign exchange reserves totaled over $244 billion as of the last week of July 2024. This is a significant amount, but it's dwarfed by China's massive reserves.

Saudi Arabia also holds considerable foreign exchange reserves, primarily due to its reliance on oil exports. The country keeps large amounts of foreign funds in reserve to act as a cushion in case oil prices drop rapidly.

Russia's foreign exchange reserves are also significant, totaling some $630 billion as of February 2022. However, sanctions imposed by various nations in response to Russia's invasion of Ukraine made most of those reserves inaccessible to the central bank.

China's Reserves are a significant part of the global economy. As of May 2024, China held $768.3 billion in U.S. Treasury securities, making it the second-largest foreign holder of U.S. debt after Japan.

This is a substantial amount of money, and it's interesting to note that China's investments in U.S. debt are a key aspect of its foreign reserves. China's foreign reserves are a major factor in the global economy, and its investments in U.S. debt are a significant component of that.

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The dollar share of country reserves has been driven by traditional factors such as currency pegs, proximity to the euro area in trade, and debt exposures.

Our research suggests that relative returns on sovereign assets have not played a large role in the dollar share of official reserves, and low interest rate periods did not significantly magnify or tilt the effects of relative returns on sovereign assets.

Geopolitical considerations do play a role in dollar shares, though they reduce the dollar share mainly when country reserve portfolios are already large enough to meet their potential foreign currency liquidity needs.

China holds more than $3 trillion of its assets in foreign currency, with most of its reserves held in the U.S. dollar, making international trade easier to execute.

The share of the USD in global reserves has been declining, driven by efforts by central banks to diversify their reserves into a wider range of currencies, facilitated by improvements in financial markets and payment infrastructures.

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As of the first quarter of 2024, the share of USD sits at $6.77 trillion, or 54.8 percent of the total official foreign exchange (FX) reserves of $12.35 trillion.

Gold holdings, valued at market prices, account for 15 percent of global reserves, and if included, the share of the USD would fall to 48.2 percent of total global reserves.

The People's Bank of China has raised the share of gold in its reserves from 1.8 percent in 2015 to a record 4.9 percent at present, while cutting its holding of US Treasuries from $1.3 trillion in the early 2010s to $780 billion in June 2024.

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Official banking channels play a significant role in exporting US banknotes, with banks ordering large quantities from the Federal Reserve and shipping them to branch offices overseas or other foreign banks.

Banks and financial institutions aren't the only ones moving US currency abroad; retail flows are also substantial. Tourists leaving the US often bring US currency with them, either changing it at foreign banks or spending it directly into circulation.

Smuggling of illicitly earned cash is another channel by which notes leave the country. This can involve individuals transporting cash over the border or sending it by mail.

The US government itself moves large amounts of cash overseas, as seen in the example of bringing over 300 tonnes of paper dollars into Iraq to help fund the Iraq War.

Our research suggests that the decline in the dollar share of foreign exchange reserves is not as significant as previously thought. This is because the decline is not always about dollar preferences, but rather about the actions of a small group of countries.

The ECB's 2023 report on the International Role of the Euro found that despite key announcements to shift currency composition, there were no material changes in key indicators of the dollar's international role. This suggests that the dollar's role remains strong.

The decline in dollar shares in foreign exchange reserves is often exaggerated, according to our research. This is because the media and other sources tend to generalize the actions of a small group of countries, making it seem like a larger trend.

Patrick Douglass, a capital markets trading principal in the Federal Reserve Bank of New York's Markets Group, and his colleagues have shed new light on this issue. Their research adds insights to the ECB's report and challenges the conventional wisdom on the dollar's decline.

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