Immigration and large banknotes ∗

Do immigrants have a higher demand for large denominated banknotes than natives? This micro study examines whether cash orders for CHF 1,000 notes, a banknote most likely used for storage purposes, is concentrated in Swiss municipalities with a high foreign-to-native ratio. Controlling for a range of regional indicators across 251 Swiss municipalities, European immigrants in Switzerland are found to hoard less CHF 1,000 banknotes than natives. This result says that immigration reduces seignorage (per person) as measured by currency orders. A 1% increase in the immigrant-to-native ratio is coincident with a reduction in currency orders by CHF 4,000. The dampening effect is attributed to specific traits linked to immigrants.