As the Reserve Bank frets about Australia's slowing levels of consumption, it's found one area that appears to be holding up well.

Australians spent $13.5 billion on illicit drugs in the year through August 2017, the central bank estimates, with methamphetamine and cannabis accounting for over 70 per cent of purchases.

Almost 2 per cent of Australia's bank notes are used for drug deals, the RBA estimates. Jennifer Soo

That's among findings of a research paper released on Tuesday exploring usage of the nation's bank notes, of which it reckons almost 2 per cent is for illegal drug deals.

"Excluding cannabis, methamphetamine -- also known as meth or ice -- is the most used illicit drug in Australia by weight, followed by cocaine, MDMA -- also known as ecstasy -- and then heroin," the report said, citing analysis of wastewater that's used to measure the population's drug consumption.

Researchers calculated that the stock of actual notes used in drug purchases -- after taking into account how often the same note tends to change hands -- was a little over $1 billion.

To estimate the value of cash used to pay for illegal drugs, the RBA paper assumed:

All drug purchases were made with bank notes, as research shows most users still buy face-to-face;

To account for drugs typically being cut with other substances, the RBA paper divided volumes by average purity levels; and

The researchers incorporated estimates of the drugs' street value

As for the denominations of notes used in such activities, law enforcement agencies suggest the $50 bill tends to be the favored form of payment.

Bloomberg