Who said COVID would be the death of cash?

One would have thought the COVID-19 pandemic and the associated restriction on cash payments would have caused the number and value of banknotes in circulation to fall.

Not so according to the Reserve Bank of Australia (RBA), which this week advised that the total value of banknotes in circulation rose by $1.6 billion in December, while $14.6 billion in new notes were added to the economy in 2020, equating to an extra $584.2 per Australian. That took the total value of notes in circulation to $98.6 billion.

CommSec economist Craig James stated that many of the new notes are being hoarded in the same way that people like to hoard newspaper, while the $50 note saw its biggest growth since 2008 in 2020, with 23.8% more of them in circulation:

In uncertain economic times, Aussies have shown a tendency to hold more physical cash. And this time is no different. There is currently almost $100 billion of bank notes in circulation, around $3,800 on average for every Aussie. And the majority of the cash in the economy is in $50 and $100 notes. The value of $50 notes is up almost 24 per cent on the year with the value of $100 notes up over 13 per cent…

The amount of bank notes in circulation rose by $1.6 billion in December or 1.7 per cent to a record $98.6 billion. The value of bank notes is up by 17.4 per cent over the year.

The amount of $50 notes in circulation rose by $1.1 billion or 2.3 per cent in December to stand 23.8 per cent higher than a year ago – the fastest annual growth in 12 years.

The amount of $100 notes in circulation rose by $346.2 million in December or 0.8 per cent. Annual growth has slowed from a 29-year high of 15.8 per cent in October to 13.6 per cent in December.

There must be a heck of a lot of hoarding, organised crime and tax avoidance going on.

Unconventional Economist
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    • boomengineeringMEMBER

      Hoarding small amounts is a safety net in case electronics fail and big amounts are no less safe than other medium e.g. confiscation of gold by gov’t
      We sometimes order big meals to pre pay and when they say no cash we turn around and walk out.

    • Is leaving it in the bank for 0% interest sound either?
      Which do you think the bigger risk is, you losing physical money that you need to store and secure, or digital currency that is in the complete control of the banks being confiscated/lost in a bank collapse? It’s not like you gain any interest these days leaving it in the bank.

    • hoarding is sound practise Peter in an environment where our political / managerial class is systematically lying to us while stripping away democratic rights …. anyone out there really trust our banking systems and be prepared to rely totally on electronic transactions?????? Are people really that naive????
      You don’t have to be a tax dodger or a crim to see the benefits of cash – which it appears a lot of Australians understand, including all those who come from or have family in less ‘stable’ parts of the world where they are smart enough to know you can’t trust governments and their ‘controllers’ ….

    • Apparently it’s not only drug dealers with a large stash of cash, it’s boomers.

      They’re taking it out of the bank and hoarding notes to reduce their bank balance so they can get the pension.

  1. rob barrattMEMBER

    COVID is a great little earner. You’d hardly be encouraging thousands of people into a stadium (with shared toilets) if that wasn’t the case. Surely?

    Oh, and if the almost inevitable happens, amazingly, no one will remember who gave the orders.

    • run to the hillsMEMBER

      Yep, my barber went to cash only for months from March onwards, obviously to ensure the turnover numbers could be adjusted down to certain levels in order to get JobKeeper, this was probably undertaken across Australia on a massive scale.

    • Reus's largeMEMBER

      This, how do you show a drop of 30%, get people to pay cash and don’t declare it, sometimes the analysis here misses the obvious by a mile.

  2. happy valleyMEMBER

    And why would you keep your money in one of our banks, to earn nothing, be covered by an absolutely useless and devious government deposit guarantee and be at the risk of bail-in?

  3. One of the first things I did after being made redundant in April 2020 was to pull $10k in cash. It sat there untouched until I nabbed a bargain on Facebook marketplace. Having cash on hand made all the difference in securing that purchase – a $20k tractor for $5k.

  4. It would be rational to hoard cash if you are expecting to end up on jobseeker. From what I understand you need to run down all savings which you might have before you qualify for payments. Cash under your mattress cannot be seen.

  5. Bulls win in overtime

    I’ve been storing all my cash in my sportsbet account. Knowing a thing or two about the corrupt nature of our government and RBA I know it’s the safest store of wealth atm. The ROI is pretty good too 😉

  6. I think the young dont mind paying a bit of Tax WHEN there own life needs are met. That includes owning a first house.

    When the Government is trying to tax us into oblivion through housing, Im not surprised Tax Evasion is a thing. I suspect in the olden days you’d shift your money into the Casino so Dirty Money could come out Clean. Nowadays, I suspect you just move it into Bitcoins and wallah, dirty money now clean.

    I’ve noticed crime is thriving in Australia. Its the criminals who are doing well in this society. I suspect drug money and prostitution is buying housing these days. Your honest Australian is suffering immensely. The dishonest are thriving while the honest are going nowhere.

    Australias lulled into a sense of complacency. Seen TV lately? Watch it long enough and you’d think Australia is paradise. People have no sense or idea of whats going on under the surface because our media services keep lying to us about the realities of whats really going on.

    I suspect there are also Gangs operating in Australia. My imagination isnt good enough to perceive all the crimes they’d be getting up to.

    Unless we have a strong leader ( how will they fix Australias Debt and falling Growth prospects? ), I only see it getting worse.

    • When the Government is trying to tax us into oblivion through housing […]

      What ? Housing is taxed extremely lightly, which is one of the reasons people are happy to pay banks to invest in it.

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