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The Future of Cash: An Asian Perspective

Categories : Uncategorized
August 7, 2017
Tags : Asia, Cash cycle efficiency, Demand, Innovation
Guillaume Lepecq

“The Future of Cash: An Asian Perspective ”, a new report by AGIS Consulting, provides unique analysis of a diverse group of Asian countries—, Hong Kong, Indonesia the Philippines, Singapore, South Korea, and Thailand—this paper looks at the complex ecosystem of stakeholders involved in the issuing and circulation of cash across these growing societies. The report finds that innovation and cooperation between the private actors and public authorities are fuelling the circulation of cash in a continent that will soon be the epicentre of the world economy.

Asia is the continent of records

In the land where coins and banknotes were born, the six countries cited in the report live up to the continent’s reputation as an innovator in currency. Hong Kong has the highest number of banknotes per person. Indonesia is home to the largest banknote printing factory. The Philippines use a unique banknote paper which combines cotton and abaca a local plant. “Asia is at the forefront of innovation in payments,” says the report’s author Guillaume Lepecq of AGIS Consulting. “New mobile payment systems, as well as alternative financial service providers, are extending the reach of finance to previously underserved populations, making delivery of cash more efficient and driving financial inclusion and development.” Given the sheer size of Asian markets and their sustained growth, the future of cash will be determined by Asia.

Accounting for over three-quarters of the world’s banknotes, its growing economies offer fresh insight into how factors like GDP growth, interest rates and cultural traditions influence the presence of banknotes among populations.



Of the six countries under the microscope, those with a dense banking structure boasting a highly-banked population—Hong Kong, South Korea and Singapore—are more cash intensive, measured both in terms of the value of cash in circulation in relation to GDP and by the number of banknotes per person. Cash demand in the other three countries whose economies are still emerging—Indonesia, the Philippines and Thailand—has been driven primarily by economic growth and financial inclusion.

Drivers of Cash Growth: Low interest rates, GDP, festive demand, contingency and international travel

Over the past decade, the reduction in the opportunity cost of holding cash, triggered by low interest rates, contributed to increase cash circulation. A linear relation between GDP and cash in circulation is observable in an area where economic growth has been particularly pronounced. The tradition of giving cash on festive occasions and the need for a reliable means of exchange during catastrophes or humanitarian crises make cash more desirable for local populations. For international visitors to the region, whose numbers continue to grow, cash is more trustworthy than cards and electronic systems, and provides transparency regarding poor exchange rates.


All six countries experienced growth in cash demand between 2004 and 2015. Excluding Indonesia, each country saw an increase in the ratio of cash-in-circulation to GDP. The study also finds that the sophistication of the payments market does little to deter a population from using cash. For instance, Hong Kong, Singapore and South Korea all have amongst the most advanced payments markets in the world, in terms of penetration of bank accounts and debit cards, and of new technology. Yet, their CIC/GDP ratios remain relatively high. As purchasing power continues to increase, cash will endure as king for these countries’ businesses and consumers.

Download the document here: The Future of Cash – An Asian Perspective