Australians hoarding cash as millions of banknotes ‘go missing’

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Toilet paper, pasta, soup, rice, flour, cleaning products. We’ve shown ourselves to be world champion hoarders from the outset of the coronavirus pandemic. But there is another item we’re accumulating – cash.

Despite the push towards digital transactions during the crisis, so many Australians have been stashing cash that the Reserve Bank has increased the notes in circulation from $83 billion to $94 billion.

“The central bank has seen a sharp uptick in Australians stocking up on banknotes in recent months on the back of growing financial concerns,” reports Business Insider.

COVID-19 has “accelerated the shift to electronic payments, [but] there has, paradoxically, also been record demand for banknotes,” Reserve Bank of Australia (RBA) governor Philip Lowe told a parliamentary committee.

“Some people seem to be wanting to keep some extra money at home.”

This is despite cash withdrawals dropping by half at the start of the pandemic.

The RBA believes a small group has taken out a “disproportionate” amount of cash. These people might be spooked by the prospect of recession or negative interest rates and some may be worried about a government proposal to ban cash transactions over $10,000.

“The $50 is the note of choice for those keeping cash under the mattress,” reports Nine, with 143 million more on issue in July than in February.

“There are now $46.4 billion worth of ‘pineapples’ around, compared to fewer than $40 billion at the start of the year.”

Previous RBA research found ongoing growth in circulation “appears to reflect growing use of banknotes as a store of value”. Up to three-quarters of outstanding banknotes, by value, are used for this purpose.

Cash, while used less frequently than in the past, “is still widely held for precautionary purposes”, the RBA said.

RBA senior manager Richard Finlay told a senate inquiry into the proposed cash ban last year: “It’s probably the case that most households have very little and a few households have a lot, and maybe people overseas hold Australian dollars.”

The ABC reports consumers aged 65 or over still made over half of their payments in cash in 2019.

“Lower-income households also tend to pay in cash more often than households in higher-income groups.

“And while cards are now used more often than cash for all payments over $5, cash still accounts for a significant share of small transactions: about 45 per cent of payments of $10 or less.”

There is an international push for a world without cash, in part to counter illegal activities such as tax evasion, drug trafficking and terrorism.

In Australia, the government estimates up to $50 billion is lost to the black economy each year.

Some European countries have already banned cash purchases for large transactions. China is moving to replace cash with a central bank-issued digital currency.

Only 27 per cent of Australia’s consumer payments were made with cash in 2019, compared with 37 per cent in 2016, and 69 per cent in 2007.

Nearly a third of people who received the federal government’s first COVID-19 stimulus payments in March saved the money, according to Australian Bureau of Statistics (ABS) data.

The $750 payment to 6.5 million Australians was intended to encourage economic activity via spending.

However, 29 per cent of recipients saved it, and 28 per cent used it to pay bills.

The survey of about 2600 people, conducted between May 10 and 23, found 12 per cent mainly used the money to buy food.

It also showed less than 10 per cent of people used it to pay their mortgage or rent.

The data showed nearly 70 per cent of the stimulus went to people aged 65 and over, and 45 per cent of that group added the money to their savings.

Brendan Coates, household finances program director at the Grattan Institute, said retirees tended to save extra money.

“Savings rates rise even if the payments are effective,” he said.

“You don’t spend it all, that gives us more of a buffer as we come off the JobKeeper and JobSeeker payments.

“Our research shows that the average retiree is a net saver, that even applies to those receiving the pension,” he said.

“They are saving for a rainy day, even when it is pouring outside.”

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Written by Will Brodie

26 Comments

Total Comments: 26
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    Gee. I wonder if that drop in cash being withdrawn from banks might have anything to do with the rapid disappearance of bank branches AND their damned ATMs? Case in point – Westpac branch, West Bundaberg. 3 external ATM, 1 internal. Bank branch closes, suddenly there’s only the internal ATM left, and it’s only accessible during business hours. ANZ – exactly the same modus operandi. I prefer to have cash, having been left stranded on more than one occasion when the system has crashed. Cash is king.

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      In most cases you can use other larger bank’s ATMs to withdraw without a fee…

      The other alternative is to change to a bank that does provide what you need. I haven’t withdrawn cash for ages.

      If one needs to withdraw cash, one can do it at Woolworths or Coles…no charge.

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    Cash Hoarders, if the economy fails, you can’t eat your cash (or gold) hoard, and it won’t keep the fire going for long, but if you buy food – of all kinds, – it keeps the economy going and the farmers out there picking, so you don’t have to try to chew on your mouldy rolls of plastic paper.
    Think Cyclones, think Strikes, think Oil shortages, etc, have lotsa grains, etc. in your cupboards and lots of tasty tinned stuff to add to it, and candles and solar panels and batteries etc, big containers of water, – think months, if you can’t spend your money for months, – what should you have in your shed etc?

    Easier and better for you and everyone if you Spend your stimulus money, hoarding it may come and bite you, and serve you right.

    • 0
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      More likely will finish up with a garage full of fat cockroaches.

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      But I don’t want to have 3 months worth of groceries in my pantry cupboard just sitting there and not being used. I purchase my food when I need it.

      Even though you can’t eat your cash, there’s some there for you to be able to purchase something you need when you need it.

  3. 0
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    For some people it would be the threat of negative interest rates that has them cashing in on their savings. Who would want to keep money in the bank if it looks like it’s going to be devalued soon?

  4. 0
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    While grocery shopping at your local supermarket you are able to make a cash withdrawal at the checkout. This is how I manage to always carry spare cash in my wallet.

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      Arn’t cash withdrawals at the supermarket only possible with a DEBIT card not a credit card?

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      Tood – I have a credit card that I use as a debit card – have been doing it this way for as long as I can remember. Always have money in it, so can draw out cash when shopping. When it asks for account – I just select ‘Savings’.

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      O&W – if you have a positive balance on your credit card, it probably works. I have a Visa Debit Card as well as a credit card. Have experienced difficulties with debit cards when it came to hotel reservations and car hires. They normally want a credit card, explanation was that a debit card could be emptied at any time and credit cards have a bank’s responsibility for payment.

  5. 0
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    Fairs, markets, fetes I am sure would all still prefer cash, and what about all those credit card fees that so many businesses want to pass on to the buyer?

    • 0
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      Tood, some businesses are ALSO adding charges for using Debit Cards. Their Eftpos machines add it to your bill automatically. I challenged 2 of them, only to be told that that is how their bank set the machines up to cover their fees. Everyone is having a go at getting other peoples money through schemes, both fair and foul.

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      Tarabelle – Aldi is a case in point, debit cards as well as credit cards are .5% of your bill. You can override it with debit cards to make it Eftpos but then you’ll need a PIN which negates the Covid-19 idea of touch cards only.. Some bars now have signs like “2.25% extra for card payments”. I have not had anyone refusing my cash payment but then I do not like in a capital city.

  6. 0
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    If you are waiting for a new keycard, usually a week, then see what you can do if you have no cash. Although I use my card most of the time I never want cash to go. The day cash goes so will your freedom to do want you want with your money. And how can you give kids pocket money. Cash gives you control. I don’t want the government to start controlling my money. They could start counting any money given to you, or what you give to others, as income. Once cash goes it will be gone for ever.

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      And that is a real concern Nan.

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      The Article was about that two lots of $750. were given to pensioners, to stimulate the economy, but we didn’t spend it, so next time they won’t waste money on pensioners to stimulate the economy because most did not, – pensioners who did not, – have effectively voted for no more stimulus money to pensioners, better to give it to people on Newstart or whatever it is called at the moment, or even better spend it on infrastructure that will enable Australians to earn more money or make stuff in Australia rather than sending money overseas to buy everything.

      The other issue mentioned, of cash versus electronic money, is where some Govt department claimed there is 50 billion dollars being exchanged in non-recorded transactions, but I would argue that that is illogical, that the cash will eventually be spent in the ‘non-black’ economy so the govt is not really losing it.
      Perhaps they argue that the old couple down the road are growing vegetables, some of which they sell, – for cash of course, to eke out their usually not adequate pensions, but that cash,- so called ‘black’ cash will be spent at a shop or whatever so the govt can take it’s cut then.

      If the govt. squeezes the little folk too hard, all they will achieve is no home grown vegetables, – how does that help anyone?
      If instead the Govt fixes it’s legislation so as Big Corporations are forced to pay for all the public services they use, that would be significant for everyone.

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      I held onto the 1st lot, then when the second arrived I had enough to buy a pergola to shade the side of my home. The timber company was grateful for the business, as were the freight company. As soon as I can find someone who wants to work, those who erect will no doubt be pleased too. …… these people are usually the ones who want cash, as I have found out.

  7. 0
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    I spent most of both stimulus payments on things I wanted but wouldn’t usually get to help local and nearby mainly small businesses. My thinking though is that people spending it on food or to pay bills is still putting it out there into our economy so it still still acts as a stimulus as money that would otherwise have been used for those basics would then be freed up to use elsewhere?

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    I prefer to pay in cash rather than have my bank statement filled with so many ‘small value’ transactions.

    To be honest, if you’re thinking of applying for a loan, ALL of your spending is laid out for all the lenders to see when you only use your card.

    This is why I withdraw my spending and food money once a fortnight. Then I’m in charge of what I spend it on.

  9. 0
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    Even if I used electronic banking which I don’t, I’d still have to use some electronic media (ATM for example) to check my bank balance so I don’t overspend. I don’t have to worry if I use cash. I certainly know when my wallet is empty.
    Because of Corona, retail shops like, and expect, you to tap your card. I hate doing it because I don’t actually get a balance of my savings after purchases, only a docket showing the amount I have spent. I still have to go to an ATM etc to check my new balance of my savings.
    I don’t think many aged pensioners, unless they have other income as well as the pension, would be ‘saving’ their $750. Mine went on repairs to my aged car and computer.

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      Teacher – you obviously have a computer – I don’t understand why you haven’t set up banking on your computer to check balances?
      My elderly brother is very similar to you, and at age 72, had NEVER even looked at a computer. But he got sick and tired of chasing around – like you – to get balances, and go into a branch to get statement copies, etc. So I bought him a basic little laptop, and set him up so that he can check his bank balances. Though apprehensive at first, he now cannot believe how easy it is, and actually said ‘I wish you’d pushed me into this before’. He does NOTHING else on his computer – he wouldn’t even know how to open another web site. Though I’ve just taught him how to receive emails, of his children and grandchildren sending him photos, so at age 75 he pats himself on the back! He checks when his pension goes in, I’ve taught him to look for any ‘suspicious’ transactions, and he loves that he doesn’t have to go into a branch all the time.

  10. 0
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    Nan this is one of the things that concern me the most. Along with the government knowing exactly what I do with my money, how will I pay for things if eftpos is down (as happens frequently)! I way bills electronically, but my weekly budget is all in cash so I can keep track of how much I have to spend…. so important when you live on a Centrelink pension!

    I certainly didn’t save the stimulus money either as my gas water heater died and I had to spend the majority of it on replacing the water heater! The small amount left bought meat that was on special to stock my freezer so I can at least eat more than mince and canned fish every day!

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