“Yes, as Krugman says, interest rates are probably an important factor. But I’m not so sure they’re the most important factor — for a few reasons. For starters, a lot of the demand for U.S. currency is coming from abroad. If you’re in another country with high inflation or severe instability, one of your main concerns is going to be preserving your purchasing power. About 70 percent of U.S. currency today – in the form of $100 bills – is abroad, compared to about 50 percent two decades ago.  And while the total level of $100 bills outstanding in the United States has a little more than doubled over 20 years, the growth in $100 bills abroad has increased by far more.”

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/15/paul-krugman-thinks-low-interest-rates-are-behind-the-boom-in-paper-currency-not-so-fast/

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