EXCLUSIVE: Reserve Bank of Australia reveals the REAL REASON why Australians are hoarding cash
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EXCLUSIVE: Reserve Bank of Australia reveals the REAL REASON why Australians are hoarding cash
Tap-and-go transactions have become a popular method of payment since the onset of the pandemic last year, reducing physical contact and replacing traditional banknote and coin transactions.
However, did you know that an increasing number of Aussies are hoarding cash?
The Reserve Bank of Australia revealed that an increasing number of Australians have been withdrawing cash from ATMs to hoard them. Credit: Shutterstock/Daria Nipot.
The Reserve Bank of Australia has confirmed in a recent study that consumers are withdrawing large sums of money from teller machines, noting that the amount of banknotes in circulation has increased by 20 per cent between February 2020 and October 2021.
Additionally, about $100 billion worth of banknotes have been reported to be in circulation last month, twice the value of banknotes in circulation in 2010.
However, the Reserve Bank of Australia said that Aussies aren't withdrawing cash to purchase things. Rather, the RBA revealed that Australians have been keeping cash under their mattresses due to their distrust of banks.
The RBA said that the surge in consumers storing banknotes and coins was caused by pandemic-induced scares such as the spread of the COVID-19 virus and lockdowns.
The Reserve Bank of Australia said: 'The store-of-wealth function performed by banknotes is particularly important during times of financial and economic uncertainty, such as the Global Financial Crisis and the Covid-19 pandemic.'
The study also suggested that although Australians are opting to use tap-and-go payments for their daily transactions since the start of the pandemic, they were still treating physical cash as gold.
'Cash is increasingly used as a store of wealth,' the RBA said.
Cash hoarding is not brand new to Aussies as it was reported that three-quarters of banknotes were 'estimated to be hoarded' in 2018.
That added up to be between $50 billion and $75 billion in cash, the equivalent of about 13 per cent of Westpac's entire deposits of more than $600 billion, based on its full-year annual report.
It was also reported that high denomination money is more likely to be circulating since the pandemic, with 73 per cent of them being $50 and $100 banknotes.
Prior to the pandemic, Aussies have been shifting their payment method from cash transactions to tap-and-go payments. Credit: Daily Mail Australia.
The pandemic has also caused ATM operations to be much costlier which led to the removal of thousands of teller machines across the country, according to the Reserve Bank.
The RBA said: 'The declining use of cash for retail payments, accelerated by the Covid-19 pandemic, has placed pressure on the current cash distribution system.'
'Specifically, lower processing volumes have led to underutilisation of cash distribution infrastructure and increased the average cost of transporting and processing banknotes.'
Even before the pandemic, Aussies have been shifting to using tap-and-go payments in their daily transactions, with only 32 per cent of in-person transactions being done with cash in 2019.
High cash users were more likely to be older, have a lower income, live in a regional area, or have limited internet access.
'The majority of these high cash users indicated that they would suffer a major inconvenience or genuine hardship if they could no longer withdraw cash or if retailers stopped accepting cash,' the RBA said.
Are you storing your cash away because you don’t trust the banks? Because you’re certainly not alone!
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