Japan: Cash demand grows during the pandemic

Japan is one of the countries with the highest levels of cash in circulation in relation to GDP in the world, with a ratio exceeding 20%, compared to 8% in the United States or 11% in the euro area. In value terms, banknotes in circulation have doubled between 2000 and 2019; however, the highest denomination, the 10,000 Yen note, represents 90% of cash in circulation indicating that cashMoney in physical form such as banknotes and coins. More is an important store of value. According to Reuters, Japanese households held over half of their assets in cash and deposits in 2019.

In spite of government efforts to incentivise digital payments, the impact of the pandemic on consumption as well as an accelerated adoption of digital payments during the pandemic, growth of cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More has resumed in 2020 after a period of stabilisation in 2019. Cash in circulation grew by 5% in 2000 compared to 2.2 % in 2020.  The growth is entirely due to the 10,000 yen note, whereas the other denominations have remained stable or declined slightly. The total value of notes in circulation reached 118 trillion yen in December 2020, a 30% increase since 2015.

According to Asahi, demand for cash have been driven by a combination of low interest rates which make it less interesting for consumers to deposit moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More in a bank account and higher fees to use ATMs. In 2020, the central government also approved virus-related cash handouts of 100,000 yen to every person. The lower demand for small denominationEach individual value in a series of banknotes or coins. More is due to a shift in consumer spending with online shopping and home-delivery services on the rise.

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