What is the value of the $100 dollar note today.

The Sydney Morning Herald recently published an article detailing correspondence received by the Governor of the Reserve Bank, Mr Glenn Stevens, advising him that "Elderly Australians committing welfare fraud on a massive scale are behind the extraordinarily high number of $100 notes in circulation..."

Setting aside the question as to how such correspondence found it's way into the public domain, the letter does raise some alarming conclusions drawn by a former public servant that one would hope would have more experience and common sense.

A Mr Peter Mair has been named as the letter-writer, and is apaprently "a former senior RBA official" among other things.

Mr Mair describes the assertion that the the "excessive" number of $50 and $100 notes in circulation as being used in the cash economy by small business people looking to avoid tax and criminals seeking to stay out of the tax system altogether, as nothing less than a "furphy". When we consider that Mr Mair has had some experience in the racing industry, one would think that he would have a slightly more balanced view of the various channels through which cash is used in society.

One of his bolder statements was that "The [Reserve] bank is basically facilitating a tax avoidance scheme by issuing high denomination notes ... They are not needed for day-to-day transaction purposes, or even as reasonable stores of value." His assertion that "the average pensioner couple could hold up to $50,000 in undeclared $50 and $100 notes to get access to the pension..." does not appear to be based in reality whatsoever.

I don't confess to knowing too many pensioners, however I'm not confident that there would be too many folks in the grey-rinse set that would have $5,000 in ready cash stashed under the bed, much less fifty grand!

Mr Mair's conclusions seem to be based on two facts - the first is that when employed at the Reserve Bank in 1996, "the Martin Place headquarters of the Reserve received regular visits from retirees wanting to withdraw large quantities of the new notes. He said the commercial banks had sent them to the Reserve because they did not have enough $100 notes on hand."

The second is that "In broad terms the average value of notes held by New Zealanders is about one third of the $2000 held by Australians - almost all of which by value is in the $50 and $100 denominations ... An obvious explanation for the difference is means test-free age pensions in New Zealand."

While I applaud anyone taking an active interest in our circulating currency, I'd hope that there would be a more reasoned approach to determining the composition of the notes we'll be using each day.

Mr Mair has obviously not needed to purchase a round of drinks at a pub in Perth within the past few years, as he boldly states that "Cards and the internet have delivered a body blow to high-denomination bank notes. They are redundant," he said. "There is no longer any point in issuing them except to facilitate tax dodging." Try buying anything more than a glass of lemonade every other hour at one of Perth's better pubs Mr Mair, and you may find your perceptions of just how much cash one requires to get by in life to be challenged.

His solution is that "authorities would announce that from, say, June 2015 every $100 and $50 note could be redeemed but no new notes would be issued. After June 2017 every note could only be redeemed at an annual discount of 10 per cent. It would mean that, after two years, each $100 note could only be redeemed for $80, and so on." Such an exercise could surely act as a case study in unintended consequences.

Judging by the breadth and strength of the reaction by pensioners across the country to Mr Mair's comments already, I suspect that he should be mindful of the consequences of circulating such opinions, even if only in private!