DP14910 Coronavirus panic fuels a surge in cash demand
|Author(s):||Jonathan Ashworth, Charles A Goodhart|
|Publication Date:||June 2020|
|Keyword(s):||Coronavirus, Currency usage, Hoarding in panics, Payment technologies|
|JEL(s):||E40, E41, E49, E63, N10|
|Programme Areas:||Monetary Economics and Fluctuations|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14910|
Over the past decade the media have regularly reported on the imminent death of cash amid rapid innovation in payment technologies. However, cash in circulation has actually been growing strongly in many counties. Perhaps unsurprisingly given Coronavirus-related health concerns, there have been renewed calls to abandon cash and some observers have argued the virus will accelerate its demise. Data thus far suggest, however, that currency in circulation has actually surged in a number of countries. While the economic shutdowns and increased use of online retailing are currently diminishing cash's traditional function as a medium of exchange, it seems that this is being more than offset by panic driven hoarding of banknotes.