(Australian Associated Press)
Australians weren’t just stockpiling toilet paper during the COVID-19 crisis – they have also been hoarding crisp new banknotes.
While consumer spending has fallen after the panic-buying splurge in March, and many retailers are refusing cash payments for hygiene reasons, banknotes have been stashed away in homes and wallets more than ever.
The Reserve Bank of Australia has been meeting spikes in demand for banknotes from commercial banks and their customers, despite reporting last week that use of cash had reduced during the pandemic.
The demand for notes for the year to last Thursday rose by more than nine per cent, going against the trend of the past couple of years.
Up to six per cent of that increase – worth about $5 billion – has happened since the mid-March share market convulsions.
The RBA revealed in its April financial stability report that cash withdrawals from banks increased in the second half of March.
“This included a small number of customers making very large withdrawals – more than $100,000, and in some cases into the millions of dollars,” it said, adding that the elevated demand had since abated.
But a banking system insider says there’s been another spike in demand in the past two weeks, not quite as big as in March, coming from banks and their customers.
“We are seeing banks are getting extra cash in anticipation of COVID restrictions easing, and retailers, pubs and clubs wanting their floats back, while people aren’t making as many deposits,” he told AAP, speaking on condition of anonymity.
“Also when people are more uncertain about things they tend to hold more liquidity around them. No one’s suggesting there’s any concern with the banks – people just do that.”
The use of cash has fallen steadily to 27 per cent of all payments late last year from 69 per cent in 2007, according to RBA statistics.
But the pandemic may not bring Australia closer to being a cashless society.
The Royal Australian Mint says coin production for general circulation has decreased slightly during the pandemic compared to the same period last year.
“We believe that Australians using contactless payments may increase post COVID-19 but this will not lead to a permanent shift to a cashless society, at least not in the near future,” the mint said in a statement.