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Reserve Bank of Australia analyses cash demand

by Guillaume Lepecq | Nov 06, 2017

Australina_BoomerangA recent article published by the Reserve Bank of Australia looks into cash demand and attempts to reconcile the apparent contradiction between two measures of cash demand:

  • The first, cash in circulation, is increasing by 6% per annum.
  • The second, cash payments -   measured as the relative share of payments made in cash - has declined from over 70% in 2007 to 37% in 2017, according to the Consumer Payments Survey (CPS).

The report concludes that:

  • Australian consumers are increasingly choosing to make payments with cards rather than cash.
  • However, the value of consumer payments has not fallen as steeply as the share of the number of payments – two different measures.
  • CPS data may be lacking information which overstates the decline in cash. Cash payments by business are not included; the shadow economy is not included and neither are tourists and overseas visitors. Evidence suggests tourists and overseas visitors are intensive cash users.
  • The velocity of cash has slowed partly due to the prevalence of ATMs, eftpos devices, self serve checkouts etc. resulting in cash as a store of value.
To read the original article, please click here.

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