Cash is also a store of value

According to a new BIS brief, cash in circulation has stabilised globally in relation to GDP, indicating a steady demand for cash as a store of value. Cash withdrawal volumes have declined significantly, driven by supply-side factors, notably the shrinking cash infrastructure. Despite the decline in withdrawal volumes, the average value of cash withdrawals has increased.

Cash remains a cornerstone of the US financial system, serving as a primary instrument for some, a reliable backup for others, and a store-of-value for millions proving its unique attributes – universal acceptance, anonymity and cost-efficiency - are yet to replicate.

Cash persists in the euro area—not just for small purchases, but as a trusted liquidity buffer. While digital payments rise, the dual role of cash endures, reflecting deep-rooted habits and a key component of trust .

A detailed study reveals a stunning truth: the global volume of banknotes in circulation has nearly tripled over the past two decades. This article takes you on a fascinating journey through the evolving landscape of currency denominations, from 2004 to 2024. By meticulously estimating the actual number of banknotes in circulation, the research uncovers the hidden factors driving this unexpected surge.

Gresham’s Law states that “bad money drives out good,” meaning people store more valuable money and spend less valuable money when both circulate at the same face value. It helps explain why cash persists as a store of value even as the use of cash for payments declines.

Global banknote demand is rebounding post-pandemic, returning to pre-2020 trends. The introduction of new high-denomination notes has slowed, yet cash remains vital as a store of value. Cash infrastructure must adapt to declining transactional use and rising precautionary demand.

Over the past two years (2023–2025), the world has faced persistent geopolitical conflicts, economic volatility, and climate-related disruptions. In such an environment, cash, gold, and cryptocurrencies have all experienced increased demand—not for transactional purposes, but as stores of value in times of uncertainty.

Cash remains a resilient and essential part of Canada’s monetary and payments landscape. The Bank of Canada’s 2024 Methods-of-Payment (MOP) Survey reveals that while digital alternatives like mobile payments and contactless cards are on the rise, cash usage has remained stable since 2020.

Despite predictions of a cashless society, cash remains vital across all age groups. New ECB research reveals older adults prefer cash for transactions, but young adults pay with cash at roughly the average rate and keep cash reserves. The perceived importance of cash is rising for all!

A new OECD paper highlights the importance of balancing digital innovation with the enduring need for cash. By adopting comprehensive policies and initiatives, governments can ensure that all segments of society have access to reliable and secure payment methods, fostering financial inclusion and stability in the digital age.

In a recent speech, Reserve Bank of Australia (RBA) Governor Michele Bullock highlighted the significant shift in consumer payment preferences, emphasizing the challenges to the cash infrastructure. The RBA is committed to ensure cash remains a viable means of payment for as long as Australians want or need to use cash.

After exceptional growth during the Covid-19 pandemic, global cash demand was negatively impacted by the return of inflation in 2022. Early figures for 2024, indicate that demand is picking up. As central banks vigorously tackle inflation, the precautionary demand for banknotes in the increasingly uncertain world will likely grow.