Even after 50 years of decimal, cash shows no sign of dying

Banks prefer to move electrons (digital money), than atoms (physical notes and coins), and have waged war on cash using ...
TETSURO MITOMO/FAIRFAX NZ

Banks prefer to move electrons (digital money), than atoms (physical notes and coins), and have waged war on cash using Eftpos, credit cards, and online banking.

Chances are you haven't got much change in your pocket, and few banknotes in your wallet.

Money, these days, is more likely to be made of "electrons" than "atoms".

Banks prefer to move electrons (digital money), than atoms (physical notes and coins), and have waged war on cash using eftpos, credit cards, and online banking.

Look, money just like that. A customer withdraw cash from New Zealand's first ATM, on Lambton Quay.
TE ARA

Look, money just like that. A customer withdraw cash from New Zealand's first ATM, on Lambton Quay.

But despite predictions of the death of cash, its use continues to at grow three times faster than the economy.

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People have an unshakeable desire to use cash.

In 2007, there was $3.3billion of cash in the hands of the public. Today there's more than $5.5b.

As a share of our "money", cash has a declining importance. Debt, equity in land and houses, and bank deposits have grown far faster.

Fewer of us also now use cash for buying things.

Payments NZ, the eftpos company, says just 10 per cent of retail sales in high socio-economic areas are cash sales.

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In poorer areas, it's about 30 per cent.

It's easy to manage a weekly budget using cash.

But Westpac thinks lots of us still have uses for cash, and resent ATM "rounding". 

The bank has 157 "smart" ATMs that can spit out the exact dollar amount people need, including coins.

"Initially, we expected it to help people on a tight budget, who can't or don't want to round up their withdrawal to the nearest $20," said Westpac's Beverley Muir.

But it's been used by richer people taking out a couple of coins for everything from kids' pocket money to sausage sizzles.

We don't officially know what all the cash out there is being used for.

In 2010, the Reserve Bank surveyed 1000 people and nearly 300 retailers to find out.

The results could only explain the use of 41 per cent of notes in circulation.

Hoarding, tax avoidance, and criminal activity may explain the rest.

A surge of hoarding was noticed in the Global Financial Crisis of 2007-08, when some feared banks in New Zealand might collapse.

There was a surge in demand for $100 notes. By value in circulation, there's more $100 notes than $20.

Some countries like India have withdrawn big banknotes, which some interpret as part of a global war on cash by authorities trying to boost tax revenues, and tackle terrorism.

With bank deposits offering low interest, there's not even a huge incentive to keep money in the bank anymore.

 - Sunday Star Times

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