Reports of cash’s demise have been “greatly exaggerated.” That’s the message of new research from the Federal Reserve Bank of San Francisco.
Researchers examined cash use in 42 countries; they found that between 2006 and 2016, the amount of cash in circulation as a share of GDP actually rose in 41 of them. “Cash in circulation” includes all cash in the hands of the public, including individuals, banks, and other businesses.
The 42 countries in the study make up 75% of the world’s economy. The chart below shows the difference in cash growth and GDP growth for a set of these countries.
The researchers believe that worldwide low interest rates, which means you don’t gain anything by keeping money in a bank, partly account for cash’s increased popularity. Another major factor may be distrust in financial institutions following the 2008 global financial crisis.
The banks of Sweden, the only country with reduced cash use, actively promote digital bank transfers and charge for the use of checks. There is also a “cultural stigma against cash” in Sweden, according to the researchers, with many Swedes associating cash with crime.
Still, in most countries, due to its convenience and reliability, cash is surprisingly alive and well.