The Demand for Cash

4 billion people live on less than $8 per day 
 and so it should not be a surprise 
 that 84% of the worlds transactions are in cash. 
 This page looks in more detail at the global demand for cash.

Demand for cash is strong

This chart shows that for 70% of countries the value of currency in circulation increases at a greater rate than the growth in national GDP.

This is approximately +3-4% p.a. globally and +5-6% even in developed markets, such as the US, the UK and the Eurozone.

Outliers include countries with significant inflation, or deflation. The countries below the line tend to be oil or commodity rich countries and have a stated policy of reducing the use of cash, e.g. Sweden, Norway, Denmark.

More examples

The graphs below show the same applies for each region of the world:

Middle East

Our Unconscious Bias

If you live in a city and use contactless cards or mobile payments then everything you think about cash is probably wrong. Our myth buster might change how you see cash today.

Myth Buster

1. Digital means the end of cash.

In Kenya m-Pesa increased its user base from 1 million to over 30+ million in ten years. At the same time the increase in value of cash in circulation also increased. We know that the value of cash in circulation is correlated to nominal GDP. We can then say that the introduction of a digital finance system did not hinder the growth of the value of cash in circulation.

Kenya m-Pesa versus value of cash in circulation

We welcome the introduction of digital finance. Digital finance systems are an enabler for financial inclusion, not a replacement for cash. It helps the poor and disenfranchised to take part in a growing economy. The evidence in Kenya is that 72% of citizens, earning $1.25 per day, use m-Pesa. As economies improve then cash is used more and more.

Financial inclusion leads to social inclusion and has a significant positive impact on women in many parts of the world.

The McKinsey macro-economic report showed that the developing world’s economy could grow by $3.7 trillion or 6% if more people had access to digital finance.

84% of people across the world today only use cash. In November 2017 the European Central Bank published a report showing that, across the well-developed countries of Europe, 79% of transactions are still cash, representing 54% of value. As expected, cash is skewed to smaller transactions.

Our mission is to enable every citizen to participate securely in the global economy. Both cash and digital finance play a crucial part in every economy.

2. Crypto-currency will mean the end of cash

Money is, by definition, a medium of exchange and a store of value. For crypto currency to replace cash, it needs to be accepted that it is valuable and this, just like cigarettes in the P.O.W. camps during WWII, depends on who, when and where. Are there enough people in society that believe that bitcoin or other forms of eCurrency are intrinsically valuable? As of today, Bitcoin, Lytheum and LiteCoin are not fiat money (backed by a government) but commodities with wild fluctuations.

There is serious work going on by many central banks to explore how a currency based on blockchain technology could help be a part of the payment mix. As the technology continues to evolve a viable eCurrency solution might emerge in the next decades. It still requires general adoption of technology and infrastructure that supported it. With 11 out of 100 people in the world still living on less than $1.90 a day, this seems like a big ask.

The Cambridge Security Initiative looked at the implications for governments on security of the economy if private companies ran separate money systems. The report, ‘Cash is King, 2016’, concludes that governments “must ensure the right mix of the means of exchange within national economic and financial systems so that stability, control and sovereignty can be maintained.”

3. Cash enables crime

2017 research ‘Keeping Cash’ by the Institute for Money, Technology and Financial Inclusion showed that criminals are using all available payment methods. When cash is targeted it just further pushed the adoption of other money laundering methods. After all, it is much easier nowadays to move $1m in a digital form such as bitcoin than in hard cash!

Increase in the use of cash – the key drivers

We know that cash grows 3-4% above GDP for most countries and in this section we look at the reasons why that happens.

1. Changes in socio-economics

Despite all the bad news we hear every day the key demographics around the world are improving every year. As the population grows then GDP grows and more cash is required.

Growth of middle class

The Brookings Institute reports an unprecedented growth in the middle class globally. “These new data, especially on prices and growth, suggest that the global middle class, numbering about 3.2 billion in 2016, may be considerably larger, by about 500 million people, than previous calculations suggested. Asian households, in particular, are now thought to be much richer, relatively speaking, than before.

Reduction in extreme poverty

Despite the increase in the middle class there is still around 11% of the global population who survive on less than $1.90 per day. Cash will always be required for this segment of the world’s population.

Growth of overall population

The UN predicts an increase in the world population by 1 billion more people by 2030. Simply put, this means more pockets carrying more cash.

2. Change of policy

The number of ATMs in the world has been growing at 3-5% a year, according to the RBR report, ‘ATM Market and Forecasts to 2022’. They require more and cleaner notes to be issued. As a result, many central banks have to update their policies to ensure notes in circulation are clean and fit for purpose. This has been driving higher banknote refresh rate.

3. Political and economic uncertainty

There is still a hangover from the 2008 financial crisis, the trust in banking in the western world has not returned yet. The political situation in 2018 is still uncertain with the shift in world power. These uncertain times support the interesting hypothesis by the Austrian Central Bank. Uncertainty means the world uses cash as a store of value to hedge against the next disaster.

The Austrian Central Bank presented a paper at the April 2017 Deutsche Bundesbank International Cash Conference entitled, ‘War on Cash: Is there a future for cash?’ They included this quote from Friedman and Schwartz, 1964, p.673. “The more uncertain the future, the greater the value of [the] flexibility [of cash] and hence the greater the demand for [it] is likely to be.”

4. Threat of natural disasters

One of the first actions the US Federal Reserve Bank took after the hurricane devastated Puerto Rico, leaving the entire island without electricity, was to fly a plane full of cash to the island. No electricity means no banking system, no telecommunications, no digital payments and no access to cash via ATMs or banks.

In disaster situations cash is the only option. In the USA alone there have been three ‘once in a hundred years’ storms in the last ten years.

5. Store of value

Cash is held in four places:

  1. The system (CB vault or CIT companies),
  2. A wallet for use,
  3. Under the bed and
  4. Overseas by organisations and individuals either to use or as a hedge against their own currency falling in value.

The UN reports the birth rate is falling globally and in developed countries it is now about 1.6, which means an aging population. Older people use cash more; to budget, as a store of value and hedging against negative interest rates.

Switzerland and Japan are good examples of where the amount of cash required increased when the banks could not offer positive interest rates. People put their money in cash – the sale of safes and safe deposit boxes increased.

Role of cash in payment ecosystems

The amount of cash in the world is a very small part of the world’s money. See this very useful description of all the world’s money in one chart.

The total value of the world’s money is $90.4 trillion. This includes coins, banknotes, money market accounts, as well as saving, checking and time deposits.


Cash is universal

Social inclusion requires that governments and central banks take account of the unbanked and underbanked. Cash is free to use, is easy to use, is reliable, is difficult to counterfeit and is fungible. Government or central bank policy must ensure that each citizen can participate in the economy. Until technology is reliable and universal, cash will always be required.

An interesting example of cash usage from the Payments UK Industry Research.

The 2.7 million people who rely on cash are not technophobes – more than 70% of them own mobile phones and other technology like gaming consoles.

They choose to use cash.

The percentages are similar in the USA but the absolute numbers are much larger.

7% are unbanked ~25 million citizens

20% are underbanked ~70 million citizens

These citizens are active participants in the economy and their needs must be taken into account. Governments must ensure that financial inclusion includes all of their citizens.

Conclusion: Cash and digital payments will co-exist

Globally, cash still dominates by number of transactions and by value


Crypto currency – still immature (infrastructure and security concern)


Technology drives increased cash usage, not a reduction in cash – mPesa


Cash is required for social inclusion


References and useful documents

April 2016

Cash is King: The digital revolution: The future of cash

A useful report that looks at cash as part of the infrastructure that a country needs for a secure economy.

The death of cash has been exaggerated. The electronic money industry has been predicting the death of cash for more than 50 years. The profitable charges on all electronic transactions which the industry make, and the increasingly commonplace use of credit and debit cards have led to these predictions becoming more intense and self-serving. Furthermore, the development of new electronic money products appeared to lend weight to their arguments.


European Central Bank: The use of cash by households in the Euro area

Although Euro banknotes and coins have been in circulation for fifteen years, not much is known about the actual use of cash by households. This paper presents an estimation of the number and value of cash transactions in all 19 Euro area countries in 2016, based on survey results. It presents an extensive description of how Euro area consumers pay at points of sale (POS). The aim of this study is to shed light on consumers’ payment behavior and in particular to improve the understanding of consumers’ payment choices at POS, based on a large sample of countries.


March 2017

The Future of Money: How digital payments are changing global commerce – Oxford Economics, NTT Data, Ingenico ePayments, Charney Research

Aimed at promoting mobile payments, this paper has useful case studies on Kenya and China.

The Future of Money, page 22: Around the world, despite their misgivings, most consumers see the future of money as much less cash – and card based. Only 27% think that, in 10 years, people will use a mix of payment types not very different from what they use today. In fact, a third of consumers globally think mobile will be the dominant payment form. But executives have a much more conservative vision. A surprising 40% of business leaders think the payment landscape in 10 years will look a lot like today’s – and just 5% think cash will be less prevalent three years from now.


September 2016

Digital Finance for All: Powering inclusive growth in emerging economies – McKinsey & Company

A useful report outlining the macro-economic benefits of digital finance.

Financial services are the lifeblood of an economy, enabling households and business alike to save, invest and protect themselves against risk. Yet in many emerging economies today, the majority of individuals and small businesses lack access to even basic savings and credit products, which hinders economic growth and perpetuates poverty. Digital technologies, starting with a mobile phone, have the potential to resolve this problem. Households and business can use digital payments and financial accounts to interact seamlessly and efficiently, unleashing large gains in productivity and investment, and prompting greater financial inclusion. While a growing body of research has demonstrated the positive impact that both financial and digital inclusion can have on household welfare, little research to date has quantified the broad macroeconomic and societal benefits. This report aims to fill that gap.


FEDERAL RESERVE BANK OF SAN FRANCISCO: Reports of the Death of Cash are Greatly Exaggerated

To answer this question, we looked at cash use in 42 economies across the globe, which together account for 75 percent of world GDP. We used currency in circulation (CIC) in these countries as a proxy for cash use. CIC measures the total amount of cash held by the public, including businesses, banks and consumers.

The article looks at why people hold cash, and at global cash trends.


EURICPA answers to the public consultation on restriction on payment in cash

In a context of terrorist attacks affecting several EU member states, the European Commission and the Member States strongly support initiatives aiming at increasing the safety of European citizens. As previously described in its 2016 Action Plan, the European Commission identified cash as a major way to finance criminal organisations and terrorism. In this context, on the 23rd January 2017 the European Commission issued an Inception Impact Assessment followed by a public consultation, both exploring several options to limit payments in cash.

EURICPA, the European Cash Protection Association answered the public consultation on potential restrictions on large payments in cash. On this occasion, ERUICPA issued a position paper explaining why cash and terrorism is a false and old fashioned belief. For ERUICPA, the potential reduction of cash will negatively impact European citizens’ everyday life and will be detrimental to the European economy.


The Death of Cash? Not So Fast: Demand for U.S. Currency at Home and Abroad
1990-2016 Ruth Judson

Abstract: It would seem that physical currency should be fading out as the world of payments is increasingly electronic with new technologies emerging at a rapid pace, and as governments look to restrictions on large-denomination notes as a way to reduce crime and tax evasion. Nonetheless, demand for U.S. dollar banknotes continues to grow, and consistently increases at times of crisis both within and outside the United States because it remains a desirable store of value and medium of exchange in times and places where local currency or bank deposits are inferior. After allowing for the effect of crises, demand for U.S. banknotes appears to be driven by the same factors as demand for other types of money, with no discernible downward trend.


Want to know more about the demand for cash worldwide?