Cash and Crises

Ukraine has managed to secure its cash supply chain despite the war with Russia. Remittances have not increased sensibly, flowing to neighboring countries where refugees have settled.

After record growth in 2020, global demand for banknotes has returned to a normal situation. More recently, rising inflation and increasing interest rates have been negatively impacting cash balances. More concerning is the decreasing transactional use of cash, which puts pressure on the cash infrastructure. The cash community should make the case that cash is part of a critical public infrastructure, the maintenance and development of which should be financed accordingly.

Afghanistan has faced a severe liquidity crisis and financial collapse since the return of the Taliban in August 2021, aggravated by a shortage of banknotes. New banknotes are due to arrive from overseas.

In 2021, global cash demand returned to a normal pre-covid distribution, which is quite remarkable after the exceptional growth in 2020. Looking forward, demand will be influenced negatively by rising interest rates and positively by geopolitical tensions. More than ever, a well-functioning cash infrastructure is essential to meet volatile demand.

To strengthen and safeguard the role of cash by facilitating open dialogue, the Austrian Central Bank has launched the Euro Cash 360° Platform, along with the Austrian Mint, social partners and other interest groups.

In this eight episode, James Shepherd-Barron talks to Brett Scott about his latest book 'Cloud Money'. In a wide-ranging discussion, they take a deeper look at the political economy of cash and the ideology driving the erosion of cash-based systems.

Cash helps Brits keep calm and carry on during the worst squeeze on living standards in 60 years.

A new paper by the Central Bank of Turkey found that financial literacy reduces cash's transactional demand but increases its precautionary demand as a store of value, leading to an expansion of cash in circulation.

In this seventh episode, James Shepherd-Barron sits down with Luis Oro, Director of Innovation at Prosegur Cash, to discuss cash, how it moves around in less developed countries and its role in society.

A new paper analyses the stabilizing effect of cash on the money supply in times of crisis. It concludes that supply-driven reductions of cash in circulation (by demonetization or capital controls) destabilize the economy if electronic payment substitutes are not instantly available.

Last Friday, an internet outage disrupted debit card payments and banking services in Canada. Shops put up “Cash Only” signs, and many retailers lost sales revenue.

Following exceptional growth in 2020, cash demand has returned to 'normal' growth in 2021. Looking forward, the rapidly rising interest will increase the opportunity cost of holding cash, while geopolitical tensions will increase the precautionary motive to keep cash.