Cash has not disappeared from the economy. We just can’t find the hiding places.
Currently, per person, there are 18 $100 notes and 38 $50 notes in Australia, according to the Reserve Bank. About $4,000 each when you add up the smaller bills and coins.
Most people don’t, which means some people have a lot more than that.
And the RBA has no idea where it is.
“I don’t have my share of these [cash notes] or know a lot of people who do,” Governor Philip Lowe said at a dinner in Hobart earlier this month.
Quite simply. It is not used, it is hoarded.
Who is using cash? Hardly anyone.
Fifteen years ago, cash was used in 69% of transactions.
By 2013, it had fallen to 47%.
In 2019? It’s 27 percent.
This is the most recent data – new figures will be released next year and cash usage should have fallen even further.
This is where it gets more vague.
“Our analysis is that most of these notes are held as a store of value,” Governor Lowe said.
This means that there is around $100 billion of cash in the Australian economy, but we are seeing it less and less.
And the inflation crisis also has an impact on the security of cash at home.
“The prices people want to pay have come down,” says Jason Catlow, director of the Aus Lock and Safe Company in Melbourne.
Before interest rates started to rise and cost inflation soared, Catlow says most people spent between $4,000 and $5,000 on home safes.
Now those numbers have slipped between $1250 and $2500. Something that worries him for the safety of people’s valuables.
“Something rather than nothing is better.
“But if the safe is broken into, if someone has $100,000 in a safe that was only appraised at $20,000, the insurance company might ask questions.”
No sign Australians will stop hoarding cash
During COVID, money was the other thing people wanted to hoard, besides toilet paper.
“The role of cash as a precautionary store of wealth in times of uncertainty has been evident during the COVID-19 pandemic, where there has been a significant increase in demand for high-denomination banknotes,” he said. declared the Bank at the end of 2020.
And this week, it’s been clear that the trend hasn’t gone away.
“I thought the allure of holding banknotes as a store of value might diminish, but there’s still little sign of that,” Lowe said.