Cash isn’t dead yet. Far from it.
These days you can pay for stuff or send money with newfangled “electronic” services such as PayPal and Venmo, fall back or traditional credit cards, cut an old-fashioned check or take your chances with Bitcoin.
Even with all these new options, however, the demand for cash “remains robust around the world” and it’s even increasing, according to a new study.
Although the use of electronic payments has grown more rapidly since 2000, the amount of cash in circulation among the world’s wealthier countries has increase about 7% to 9%, the Bank for International Settlements found.
The use of cash has risen in most countries except in the Nordic region — Denmark, Norway and Sweden. Cash in circulation in Japan, for instance, is 10 times as large as it is in Sweden after accounting for the different sizes of their economies.
Japan and Hong Kong have posted the biggest increases in the use of cash since 2000.
“Cash in circulation is, in fact, not dropping for most countries,” the study’s authors wrote.
Why is cash still royalty among the various forms of currency?
The BIS study suggests cash is being used in countries such as Japan increasingly as a store of value, like gold, rather than as a means of payment. That’s evident by an increase in demand for larger-denominations bills over smaller ones.
The seemingly insatiable demand for cash is not entirely clear, the study says.
People who like to keep lots of currency on hand may do so because they are uncertain about the health of the economy or the stability of their government. Japan has suffered from low inflation for years and Hong Kong residents might be nervous about mainland China tightening its control over the island.
Low inflation and interest rates also makes it less costly to hold on to cash. Putting the money into the bank isn’t going to deliver much of a return.
The use of cash is also integral to the black-market economy when buyers and sellers want to avoid government scrutiny or evade taxes. Electronic payments are easier for governments to track.
Ironically, the same leaps in technology that have made electronic payments more popular than ever have also made it easier to use cash. ATMs are ubiquitous around the world.