Money remain leader in the digital age

USDDigital payout systems have flourished in recent years. However, the amount of US currency in circulation worldwide has increased by 87% over the past 10 years. The amount includes real banknotes and coins held by banks, companies, investors and ordinary people. In 2006, more than 783 billion USD were exchanged their owners around the world. According to the new Fed study last year, the sum was worth 1.46 trillion USD. Another Fed study for New York estimates that most of the dollars are held outside the country.

“The allegations of death of the cache are far too exaggerated”, said the Fed Chairman of San Francisco, John Williams. “In most countries, demand for banknotes and coins is strong and shows no signs of delays”, added he.

The economic factors, variable interest rates and even natural disasters can lead to increased demand for dollars. In the world, the US currency is perceived as being secure in times of political and economic turmoil. All types of cash, however, are increasing, not just dollars. According to the Fed, in 40 of the 42 big economies – from Europe and Asia to Latin America and the United States – the growth of cache in circulation has overtaken economic growth over the past 10 years.

The Fed’s claims are also supported by the private sector. Today, 83% of global transactions are in cash, according to Western Union, and the decline is quite slight compared to 85% a decade ago.

There are many reasons why people prefer cash. They are convenient, do not require a bank account or mobile phone and it is nice to have hidden for emergencies. In some of the developing countries, the circulation of the cache is dramatic, with the strongest in Argentina – 900%. However, in other countries experiencing various shocks, the increase is also significant – 442% in Mozambique, 413% in Myanmar and 355% in Ukraine. In more developed countries, trends are not similar, although growth in circulation also outstrips overall economic growth. Among these countries are Great Britain, Canada and Japan.

Exceptions to the Fed report are Sweden and Norway, where money in circulation has fallen over the last decade. The largest Norwegian bank, DNB, eliminates cash in its branches, and Sweden has created an infrastructure that encourages digital payments.