Resilient Cash in Canada

The Bank of Canada (BOC) runs two ‘Cash Alternative Surveys’ (CAS) in April and August each year of a representative sample of 2,500 – 3,500 Canadians. It combines this with data from its Bank Note Distribution System to monitor the use of cash. BOC has just issued its latest staff discussion paper looking at what happened in 2021 ¹.

The data shows that between the start of the pandemic in March 2020 in Canada the value of the notes in circulation (NIC) doubled. BOC took the weekly NIC data from 2017 to 2019 and extrapolated out what would have happened for each denomination in 2020 and 2021. If found that the low value notes grew less than the prediction while the high value notes grew more, reinforcing the view that money was held primarily for precautionary reasons.

Cash usage fell, but then so did debit and credit card usage. By August 2021 cash usage for transactions matched that of debit cards.

By August 2021 13% respondents reported having already gone cashless, but the 2019 figure was 10% representing, therefore, a relatively small change. When asked if they had cash on them even though they were cashless, 6% had cash on them, more than in 2019.

The figure of those who planned to go cashless hardly changed over the two years. The figure for zero other cash on hand and zero other cash holdings increased by more than those going cashless which may be an early indicator of future change (not stated in the paper).

Finally, the CAS survey asked whether people had heard news stories about cash not being accepted or whether they themselves had experienced cash not being accepted at the point of sale. In August 2021 the results were 2% and 4% respectively, perhaps a counter intuitive result. In April 2020 12% said they had been unable to pay in cash.

Final word

Although not in the paper, these results suggest a steady recovery in the position of cash and the importance of cash in a crisis. It appears to remain a robust and valued payment option.

1 - Staff Discussion Paper - 2022-8. Cash and COVID-19: What happened in 2021. Heng Chen, Walter Engert, Kim P. Huynh, Daneal O'Habib, Joy Wu, Julia Zhu.