Bank of Canada Survival Analysis of Banknote Circulation

Survival Analysis of Bank Note Circulation: Fitness, Network Structure and Machine Learning ¹

The Bank of Canada (BOC) has a Currency Inventory Management Strategy (IMS) based on its high-speed sorters that capture the image of every banknote, including the serial number, along with the date the banknote was created, shipped from the central bank’s distribution sites and returned to them. The context for the study, even before the pandemic, was the decline of cash used at the point of sale while cash in circulation relative to GDP has been stable or even rising.

Canadian issue

The BOC issues banknotes through its Agency Operation centres in Montreal and Toronto to ten regional distribution centres. The regional centres then distribute the notes to financial institutions. BOC carries out fitness sorting, studying 22 criteria, of returned notes. Its Note Exchange System manages the flow of notes, keeps the ledger and is used for forecasting note demand.