US COVID Results in More Cash

David Lott of the Federal Reserve Bank in Atlanta gave an interview to ATM Market Place based on their 2019 consumer survey and some additional surveys carried out this year, as well as their normal cash processing role.

David started by noting the 10 point decline in cash as a percentage of the average consumer’s total payments between 2009 and 2019 – down to 30%. Although COVID has meant less shopping in total, the US stimulus package also meant that the percentage of consumers with less than $25 in cash on them reduced from 43% to 34% between October 2019 and Spring 2020. The number of people holding $100 or more increased from a third to a half.

Although neither the Federal Reserve nor the Treasury have made a statement about the safety of cash in the pandemic, David said that their cash servicing operations were handling cash as normal. The cash centre had introduced no additional procedures more than had been introduced in any other part of the building. The usual hand sanitising and social distancing applies, of course.

This interview coincides with the Federal Reserve announcing its banknote indent from the Bureau of Engraving and Printing for the year 1 October 2020 to 30 September 2021. This year’s order is unusual for three reasons: 

• The order is for a range of notes, not a specific number. 

• It includes an order, albeit a small one, for the $2 note (38.4 to 51.2 million pieces). 

• The volume is driven by the need to satisfy a net increase in payments rather than just the replacement of worn out and destroyed notes.

The order is 7.6 to 9.6 billion pieces, up 30.6% to 65.9% on the previous year. Note that in 2020 the indent was increased in April from 5.2 billion pieces to 6.2 billion and was then adjusted down to 5.8 billion later with a different mix of denominations. As usual the biggest denominational orders by volume were the $20 (3.1-4.0 billion) and the $100 (2.5-3.2 billion).