{"id":6416,"date":"2021-02-11T10:46:00","date_gmt":"2021-02-11T10:46:00","guid":{"rendered":"https:\/\/www.tellermate.com\/us\/?p=6416"},"modified":"2021-02-23T12:14:46","modified_gmt":"2021-02-23T12:14:46","slug":"cash-in-circulation-is-soaring","status":"publish","type":"post","link":"https:\/\/www.tellermate.com\/us\/news-and-resources\/cash-in-circulation-is-soaring\/","title":{"rendered":"Cash in Circulation Is Soaring"},"content":{"rendered":"

Worldwide cash in circulation has increased significantly since the pandemic started. We have looked at the main western markets \u2013 US, UK and Europe \u2013 to shed some light on the phenomenon.<\/p>\n

After reading, you will see why big increases in demand for cash usually signal a turn in the economic cycle and have led to booms.<\/p>\n

How did the pandemic influence the trend?<\/h3>\n

Growth in demand for bills and change increased slightly in late March. This is likely to be due to people withdrawing some extra cash as a precautionary response to heightened uncertainty. The trend of increasing cash demand continued when non-essential shops, bars and restaurants began to gradually reopen across the west.<\/p>\n

Nearly all established markets saw an increase in the value of cash in circulation during the pandemic. In both the\u00a0US and the euro area<\/a>, total currency in circulation in September 2020 was more than 10% higher than a year earlier, with a similar pattern in\u00a0Canada<\/a>\u00a0and many other countries.<\/p>\n

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Key Drivers\u00a0 – What is behind the increase in cash?<\/h3>\n

The first key driver was the big fall in consumption at the start of the pandemic. The temporary closure of shops and restaurants, and the implementation of social distancing rules during the Covid pandemic, led to significant declines in household spending. This meant that people were holding onto their spare cash for longer.<\/p>\n

The decline in household spending also led to a decrease in debit and credit card and cash use: total household expenditure fell by almost 30% in April 2020,\u00a0according to Visa<\/a>, while the value and volume of contactless card transactions\u00a0also fell<\/a>\u00a0in April, by 40% and 44% respectively.<\/p>\n

Where is all the cash being held?<\/h3>\n

Human behaviour suggests that when events happen that impact the economy negatively, people tend to stash more cash at home in uncertain times or when they feel they cannot trust banks and interest is generally low.<\/p>\n

When Covid hit, it triggered a change in behavior and banknotes started being held \u2014 among retailers, financial institutions, ATMs, or the public \u2014 and weren\u2019t returned as usual. Here is why:<\/p>\n