The denomination of a banknote matters for people’s money demand, with people responding differently to rate moves depending on whether the note is high- or low-value, according to research published by the Bank of Canada.

In the staff working paper, Casey Jones and Geoffrey Dunbar study what they call the “undemand” for money – the probability that people deposit the note at a financial institution.

“The functions of money appear denomination-specific,” they write. Their results imply that