Most of it is in the underground economy, where it fuels criminal activity and business that goes untaxed. There are other ways for the mafia to deal with an absence of large bills, but I believe this scenario would be common. A higher inflation target would be followed, over time, by a higher inflation rate, which would be accompanied by higher nominal interest rates. Of course, this also would impose that same inconvenience on the legitimate uses of large bills. Whether we achieve a mostly cashless society sooner or later should be left to technological advancement.

Source: Wall Street Journal September 25, 2017 02:03 UTC