[10][11] In 2023[update], there were A$4.4 billion in coins[12] and A$101.3 billion in notes[13] of Australian currency in circulation, or around A$6,700 per person in Australia,[14] which includes cash reserves held by the banking system and cash in circulation in other countries or held as a foreign exchange reserve.

Section 51(xii) of the Constitution of Australia gives the Commonwealth (federal) Parliament the power to legislate with respect to "currency, coinage, and legal tender".

[18] In 1937, a banking royal commission, appointed by the Lyons government, recommended that Australia adopt "a system of decimal coinage ... based upon the division of the Australian pound into 1000 parts".

In February 1959, treasurer Harold Holt appointed a Decimal Currency Committee, chaired by Walter D. Scott, to examine the merits of decimalisation.

This was reduced to a shortlist of seven names: austral, crown, dollar, pound, regal, tasman and royal.

It has first issued commemorative 50-cent coins in 1970, commemorating James Cook's exploration along the east coast of the Australian continent, followed in 1977 by a coin for Queen Elizabeth II's Silver Jubilee, the wedding of Charles, Prince of Wales and Lady Diana Spencer in 1981, the Brisbane Commonwealth Games in 1982, and the Australian Bicentenary in 1988.

In commemoration of the 40th anniversary of decimal currency, the 2006 mint proof and uncirculated sets included one- and two-cent coins.

This provided an impetus for the Reserve Bank of Australia to develop new note technologies jointly with the Commonwealth Scientific and Industrial Research Organisation, culminating in the introduction of the first polymer banknote in 1988.

Note Printing Australia prints polymer notes or simply supplies the polymer substrate[42] for a growing number of other countries including Bangladesh, Brunei, Chile, Kuwait, Malaysia, Mexico, Nepal, New Zealand, Papua New Guinea, Romania, Samoa, Singapore, Solomon Islands, Sri Lanka and Vietnam.

On 27 September 2012, the Reserve Bank of Australia stated that it had ordered work on a project to upgrade the current banknotes.

However, following the death of Queen Elizabeth II, the government has announced that the $5 note will be replaced with a design reflecting Indigenous history and culture.

With the breakdown of the Bretton Woods system in 1971, Australia converted the traditional peg to a fluctuating rate against the US dollar.

[56] In December 1983, the Australian Labor government led by Prime Minister Bob Hawke and Treasurer Paul Keating floated the dollar, with the exchange rate reflecting the balance of payments as well as supply and demand on international money markets.

[62] Some commentators speculated that its high value that year was related to Europe's sovereign debt crisis, and Australia's strong ties with material importers in Asia and in particular China.

The Australian dollar is popular with currency traders, because of the comparatively high interest rates in Australia, the relative freedom of the foreign exchange market from government intervention, the general stability of Australia's economy and political system, and the prevailing view that the Australian dollar offers diversification benefits in a portfolio containing the major world currencies, especially because of its greater exposure to Asian economies and the commodities cycle.

[66] For decades, Australia's balance of trade has depended primarily upon commodity exports such as minerals and agricultural products.

This means the Australian dollar varies significantly during the business cycle, rallying during global booms as Australia exports raw materials, and falling during recessions as mineral prices slump or when domestic spending overshadows the export earnings outlook.

This movement is in the opposite direction to other reserve currencies, which tend to be stronger during market slumps as traders move value from falling stocks into cash.

[65] Other factors in its popularity include a relative lack of central bank intervention, and general stability of the Australian economy and government.

[67] In January 2011 at the World Economic Forum in Davos, Switzerland, Alexey Ulyukaev announced that the Central Bank of Russia would begin keeping Australian dollar reserves.

[68] Australian notes are legal tender throughout Australia by virtue of section 36(1) of the Reserve Bank Act 1959 without an amount limit.

The Reserve Bank states that businesses can set commercial terms for a transaction that requires the use of a non-cash payment.

[74] Australian notes and coins are also legal tender in the independent sovereign states of Kiribati, Nauru, and Tuvalu.