Distribution

Sealed stacks of the new $5 banknotes.

Issuance

The Reserve Bank is responsible for the production and issuance of Australia's banknotes. Once printed by Note Printing Australia Limited, they are delivered to the Reserve Bank's primary storage, processing and distribution site in Victoria – the National Banknote Site. The Reserve Bank also has a contingency site for banknote distribution located in Sydney.

The issuance of banknotes from the Reserve Bank into circulation is facilitated by a series of legal agreements, known as the Banknote Distribution Agreements (BDAs). These are bilateral agreements between the Reserve Bank and participating institutions (the BDA participants). Only BDA participants can purchase banknotes directly from the Reserve Bank.

As an alternative to purchasing banknotes directly from the Reserve Bank, BDA participants are encouraged to purchase surplus banknotes from each other. This is also how organisations that are not party to a BDA are able to obtain banknotes.

Transport, storage, processing and quality sorting

The distribution of banknotes throughout the country is carried out by the cash-in-transit (CIT) industry. The BDA participants engage these CIT companies to transport, process and store banknotes on their behalf. In order to collect banknotes from the Reserve Bank, CIT companies must be nominated by a BDA participant and approved by the Reserve Bank (approved CITs). These approved CITs collect banknotes from the Reserve Bank's distribution site and transport them to their approved cash depots for distribution to financial institutions and retailers throughout Australia. In addition to approved CITs, there are a large number of smaller CIT companies operating in the Australian market that are not part of these wholesale arrangements but nevertheless support retail cash distribution.

Banknotes in circulation that are surplus to the requirements of the public are returned by financial institutions and larger users of banknotes (such as major retailers) to approved cash depots. These banknotes are then processed by the approved CITs, which involves verifying, counting and sorting banknotes based on their denomination and whether they are fit or unfit (i.e. the extent of any damage associated with regular wear and tear). Poor-quality banknotes that are no longer fit for circulation (unfit banknotes) are packaged and returned to the Reserve Bank. Banknotes that are deemed to be of good quality (fit banknotes) remain in circulation.

Removal from circulation and destruction

Banknotes are returned to the Reserve Bank by approved CITs on behalf of the BDA participants. Two types of banknotes are returned to the Reserve Bank – surplus and unfit banknotes. First, given the seasonal nature of banknote demand, banknotes that are surplus to current needs are returned. These banknotes are stored at the Reserve Bank and reissued into circulation as they are demanded. Second, as already noted, BDA participants are responsible for returning unfit banknotes to the Reserve Bank. These banknotes are processed by the Reserve Bank to count them, confirm their authenticity and to remove any fit banknotes. Unfit banknotes are then destroyed by the Reserve Bank, while fit banknotes are repackaged and returned to circulation as they are demanded.

Banknote circulation statistics, including the value of banknotes on issue by denomination, are available on the RBA website.