Posts Tagged ‘cash’
“Cash is king”*…
“The king is dead, long live the king” Nick Routley on the replacement of cash by digital payment…
As credit cards and digital wallets (e.g. Apple Pay, Paytm, Alipay) see increasing adoption around the world, the share of cash being used in transactions is plummeting.
The chart above looks at cash as a share of transaction value in selected countries at three time periods (2019, 2023, and 2027P). Highlighted in red is cash’s projected drop from 2019 to 2027. This data showing the death of cash comes from WorldPay’s Global Payments Report 2024.
The prominence of cash for use in transactions is dropping in every country measured. This includes countries where cash was preferential method of payment in POS transactions.
One clear example is Nigeria. In 2019, over 90% of transaction value was still in cash payments. That number has now fallen to 55% today. Cash is still the leading payment method in Nigeria and a handful of other nations, but current trends indicate this may not be the case for much longer. For now, cash also remains the leading method of payment in various South American and East Asian countries…
All that is solid melts into air: “Charted: The Death of Cash Transactions Around the World,” from @NickRoutley in @VisualCap.
For more: “What is a cashless society, and what does it mean for businesses?“
And for a consideration of the pros and cons: “Should We Become a Cashless Society?“
Also apposite: “Target said that due to ‘extremely low volumes,’ it would no longer take personal checks.”
* Modern saying, summarizing the position in a recession
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As we click, we might recall that it was on this date in 2001 THAT The Code Red worm was released onto the Internet. Targeting Microsoft’s IIS web server, Code Red had a significant effect on the Internet via the speed and efficiency of its spread. Much of this was due to the fact that IIS was often enabled by default on many installations of Windows NT and Windows 2000. But Code Red also affected many other systems with web servers, mostly by way of side-effect, exacerbating the overall impact of the worm.
“A greenback, greenback dollar bill / Just a little piece of paper, coated with chlorophyll”*…
Americans are increasingly going cashless. Still, as Marcus Lu illustrates, there’s rather a lot of currency in circulation– almost $2.3 Trillion (of which about a third, an estimated $950 Billion [and here] is outside the U.S.)…
Every year, the U.S. Federal Reserve submits a print order for U.S. currency to the Treasury Department’s Bureau of Engraving and Printing (BEP). The BEP will then print billions of notes in various denominations, from $1 bills to $100 bills.
In this graphic, we’ve used the latest Federal Reserve data to visualize the approximate number of bills for each denomination globally, as of Dec. 31, 2022…
“Visualizing All of the U.S. Currency in Circulation” from @VisualCap.
* Ray Charles, “Greenbacks”
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As we concede that cash is still king, we might send penurious birthday greetings to Kenneth Rogoff; he was born on this date in 1953. An economist who teaches at Harvard and has served as the Chief Economist of the International Monetary Fund, he has been a vocal champion of austerity… thus in conflict with Nobel Laueate and former chief economist of the World Bank Joseph Stiglitz (and radically less consequentially, with your correspondent).
While Rogoff completed his education (at Princeton and MIT), he dropped out of high school at 16 to concentrate on chess (at which time he met Bobby Fischer, who was impressed by Rogoff’s “self-assured style and his knowing exactly what he wanted over the chessboard”). Two years later he returned to school but continued to play competitively. Indeed, In 2012 he drew a blitz game with the world’s highest rated player Magnus Carlsen.
“The best way to destroy the capitalist system is to debauch the currency”*…
… the capitalist system or for that matter, just about any economic system. So the keepers of those systems, the 169 authorities that issue money around the world, take that threat very seriously. About half of them depend on one company, De La Rue. As Samanth Subramanian explains, the pandemic has been a roller coaster ride for cash– and thus for De La Rue…
… De La Rue… is in the high-stakes business of authentication. It designs and prints national passports, as well as the silver foil labels that mark cigarette packs and alcohol bottles as genuine. Most crucially, it works with roughly half of the world’s central banks on their currency notes: designing them, developing security features to protect them from counterfeiting, and printing them. From its presses in Asia and Europe, De La Rue turns out up to 6 billion banknotes a year, making it the world’s largest commercial printer of currency.
That number is only a fraction of all the notes printed worldwide annually. The biggest central banks—such as those of the US, China, India, and Brazil—tend to have their own presses. Still, many smaller countries outsource their production of money. De La Rue prints British pounds, Fijian and Barbadian dollars, Qatari riyals, Sri Lankan rupees, and dozens more currencies…
[There follows a fascinating history of the company…]
… A major issuer like the Bank of England will place a currency order annually; smaller banks can order once every few years. But the past is not always a reliable guide. During times of inflation, for instance, the demand for notes grows. De La Rue is one of the few companies for which inflation—or, for that matter, regime change—is a good thing. The fall of Saddam Hussein warranted new notes; so did the creation of South Sudan.
Most countries are better prepared for more predictable cycles of cash use. Around the Middle East, central banks arrange to have more currency on hand before Eid al-Fitr, when it’s customary not only to spend money on festivities but also to hand out gifts of crisp new notes. The same goes for the Chinese New Year and Christmas.
The pandemic proved to be unexpectedly disruptive. A casual observer may have expected cash use to plunge in 2020, as people stayed home during lockdowns and worried about catching the virus from banknotes. In fact, disasters tend to drive people toward cash, as a physical store of safety and wealth. As a result, in most countries, the average value of notes drawn from ATMs went up by about 25-30%. Central banks also wanted new, cleaner notes, and larger stocks of notes in general, so they ordered more.
Across the US and Eurozone, total currency in circulation in September 2020 was more than 10% higher than the previous year. In the US, the number of notes circulating usually tends to rise by an annual 1-2 billion. In 2020, that figure surged to 6 billion.
De La Rue welcomed the bonanza. It had suffered a setback in 2019, when it failed to win a £490 million contract to print the new, post-Brexit British passport. (Ironically, the job went to an EU company). But after the pandemic glut of orders for new notes, demand sank to lower-than-normal levels between 2021 and 2022. The currency division’s revenues fell 2.1%, to £280.9 million. The chair of De La Rue’s board resigned in April 2023 after the company put out a profit warning—its third in a year (a new chair was appointed in May). For De La Rue, the hangover from the pandemic has been more challenging than the pandemic itself…
The world’s largest money printer made bank during the pandemic: “De La Rue: Currency printer to the world,” from @samanth_s in @qz.
* Vladimir Lenin
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As we muse on money, we might recall that it was on this date in 1939 that The Wizard of Oz was first shown to the public in Dennis, MA, one of three test screenings ahead of the official release. Fearing the film would be unpopular, MGM executives opted to gauge audience reaction. The film was of course well received, and the studio proceeded with the star-studded Hollywood premier at Grauman’s Chinese Theater (on August 15).
And on the subject of currency, it’s worth noting that many view Dorothy’s trek to the Emerald City to be a lightly-veiled critique of the Gold Standard…
“It’s All About The Benjamins”*…
A funny thing happened on the way to a world of cryptocurrencies and mobile payments. Cash became more popular than ever. The main reason? The one hundred dollar bill.
In 2017, for the first time ever, the one hundred dollar bill became the most popular US bill in circulation, beating out the one dollar bill. It is quite the turn of events for Benjamin Franklin-faced banknote. Just 10 years ago, it was less common than both the $20 and the $1.
The share of US dollars in circulation as a share of GDP rose from about 6% in 2010 to 9% in 2018, according to the Federal Reserve. Increased use of $100 bills has been the primary driver…
Why cash is king: “There are now more $100 bills than $1 bills in the world.”
* Puff Daddy
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As we contemplate currency, we might spare a thought for Franco Modigliani; he died on this date in 2003. An economist, he originated the life-cycle hypothesis, which attempts to explain the level of saving in the economy, suggesting that consumers aim for a stable level of consumption throughout their lifetime (for example by saving during their working years and then spending during their retirement)– for which he was awarded the Nobel Prize in Economics in 1985.
Among his other accomplishments, he initiated the Monetary/Fiscal Debate when he (and co-author Albert Ando) wrote a scathing critique of an early 1960s paper by Milton Friedman and David Meiselman. Freidman and Meiselman had argued (in effect) that monetary policy was the only effective tool in managing an economy; Modigliani and Ando pointed out flaws in their analysis and made the case for fiscal measures (effectively, government spending) as equally-effective tools. The debate– known by the antagonists’ initials as the AM/FM Debate– rages to this day.
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