Nov 27, 2017 - New Zealanders increasingly think we're moving to a cashless society. So why has the amount of cash held in New Zealand more than trebled in the last 20 years? Lynn Grieveson looks at whether criminals, tradies or abusers of migrant workers are responsible. Half of New Zealanders think that we won't be using cash in ten years' time, and over two-thirds rarely carry cash now, yet new research shows that the amount of cash in circulation has grown over the past decade, outpacing the growth in GDP.
The Federal Research Bank of San Francisco released research last week into cash use around the world.
After looking at the amount of cash in circulation in 42 economies including New Zealand, the Bank found that in nearly every country the amount of cash being held grew as fast or faster than GDP over the past ten years.
In New Zealand, the amount of cash in circulation rose by 76 percent over the past decade, while GDP only rose by 54 percent - a 21.5 percentage point difference. Over the same period, the average household wage grew only 42 percent.
This increase in cash in circulation gave us a ranking of 27th in the list of 42 countries, which was topped by troubled economies such as Argentina (where the rise in cash in circulation was 769 percent more than the rise in GDP), the Sudan (454.5 percent) the Ukraine (368.2 percent) and Afghanistan (206 percent).
The two outliers in the survey were Norway and Sweden, where cash use is declining.
Why so much cash?
The Bank had some theories for the results, which it conceded "may come as a surprise" given technological innovations in the payments sector and a widely-held view that cash is nearly dead.
In countries in economic and political turmoil it clearly makes sense to have a store of cash. But the Bank suggested that the low interest rates in many countries since the global financial crisis may also be factor, as people worry less about the interest they are losing out on by keeping a stash of cash that could otherwise be in a savings account or investment.
New currency designs, as we have had in New Zealand, can also bump up the amount of cash in circulation.
But it seems unlikely to be a major factor, and the statistics show fewer people carrying cash and ATM use falling. ATM use fell 22 percent in Australia over the past five years, even as the amount of cash in circulation there rose 17.7 percent faster than the rate of GDP growth.
Continue to read the full article by Lynn Grieveson on Neewsroom here || November 27, 2017 |||