News in Brief

Armaguard and Prosegur Agree to Merge in Australia

In Australia, Armaguard Group has reached agreement to merge Prosegur Australia into their business. The usual regulatory approvals will be needed from the Australian Competition and Consumer Commission. The merger will include cash in transit, technical services and ATM networks within Australia.

Armaguard say the combined businesses will safeguard reliable access to cash since there is currently excess capacity in the cash in transit and wholesale cash distribution businesses. Both businesses have been working with the Reserve Bank of Australia to reform the industry but Armaguard argues that declining cash volumes mean two major players cannot be sustained.

Central Bank Promotes Cash Use

Oesterreichische Nationalbank (OeNB) has posted on LinkedIn a short video giving five reasons why cash is good.

Protects privacy
Inclusive means of payment for groups such as the blind
Stores value
Overview of expenses
Secure means of payment, especially in times of crisis.

The piece ends with a question, how do you feel about cash... is a life without cash conceivable for you?

Central banks usually say they are neutral when talking about the different means of payments and so this is an exceptional piece by OeNB.

Did Negative Interest Rates Drive Cash Holdings?

Bloomberg has reported that banknote circulation in the euro area started to fall in the week ending 22 July and that, since then, €16.8 billion has been returned to the European Central Bank (ECB). The ECB has had negative interest rates for eight years and announced a rise in interest rates on 22July. It appears that banks, businesses and households have been holding cash to avoid those negative interest rates.

Reductions in cash in circulation happen, usually after the Christmas holidays, but mid-year returns are rare. The denominations returned, according to the ECB, have been mainly €500 and €200 notes and have come back from banks to the central bank accounts.

When negative interest rates were first introduced in 2014, initially banks absorbed the costs. In time they passed on those costs to customers. In May 580 German lenders collected deposit fees. Last week only 35 did. Some banks are believed to have held cash as a way of avoiding negative interest rates.

Ukraine Cash Demand Up

The value of cash in circulation increased 7.4% in Ukraine in the first six months of 2022. Since April there has been a gradual 2% reduction in the value of cash in circulation. The UAH 500 note represents 24.9% of the number of banknotes in circulation. Demand for the UAH 200 has also increased. Between January and March the volume of cash increased by 9.2%.

The lowest denomination banknote, the UAH 10, only represents 4% of the total number in circulation. A gradual change over from notes to coins is underway. The UAH 10 coins make up 0.8% of the volume, with the 10 kopecks 28.5%.

Israel Introduces Cash Payment Limits

The Bank of Israel has prohibited cash transactions of over 15,000 shekels ($4,400) and business transactions over 6,000 shekels ($1,760). Fines for breaking the rule will be between 15-30% of the value of the transaction. This applies to donations, loans and salaries as well as other business-related payments.

In 2019 the limits were set at 11,000 and 50,000 shekels respectively. A further measure stopping citizens holding over 200,000 shekels ($58,600) is expected. The Israel Tax Authority says the law is to combat money laundering, tax evasion and terrorist financing.

Cash Withdrawal Limits Introduced in Sierra Leone

Sierra Leone has been experiencing cash shortages. As part of the response, it has redenominated its currency, reducing the number of zeros by three. Unfortunately, it has now had to limit how much cash firms can withdraw.

Cash withdrawals from personal bank accounts have been limited to 30,000 new leones ($2,180) per week and firms limited to 100,000 new leones ($7,267) per week. 800 million new leones were withdrawn from bank accounts in under two weeks, about 10% of the national budget. Only 29% of Sierra Leoneans over 15 years old have a bank or mobile money account. The majority of the country’s 130 ATMs are in Freetown. Fuel prices have doubled this year and inflation has increased from 17% to 25%.

A National Payment Systems Act was passed in 2021 and there is a four year National Financial Inclusion Strategy which wants to increase account ownership, increase digital payments and reduce cash usage. The World Bank is working with the Bank of Sierra Leone to launch a payment switch this year.

Most and Least Cash-Based Societies

A website, Merchant Marine, has analysed a range of metrics for 90 countries, 30 European and 60 outside of Europe, to identify which countries use most cash.

The metrics included:

Internet penetration showing the percentage of people with access to the internet.
Automated teller machines (ATMs) per 100,000 adults.
The percentage of people with a credit card.
The percentage of cash based payments.
The percentage of the population without a bank account.

The countries’ scores were then compared and ranked to give a total cash-reliant index score out of 10.

Based on those measures, 74% of Morocco’s payments are cash-based with 71% of the population without a bank account and only 0.2% having a credit card. 84% have internet access. Egypt, Kenya, Nigeria and the Philippines came next.

In Europe the top five cash users were Bulgaria, Romania, Greece, Ukraine and Portugal. Apart from Greece, Portugal and Italy, the rest of the top ten were all from eastern and central Europe.

The countries closest to being cashless were Norway, Finland, New Zealand, Hong Kong, Sweden, Denmark, Switzerland, UK, Singapore and the Netherlands.

Cash Restriction in Qatar

The Central Bank of Qatar has banned the sale, purchase or rental of all types of

property, vehicles, maritime transportation, precious metals, gemstones, jewellery, camels, horses, livestock or falcons using cash with a value greater than QAR 50,000 ($13,732). This includes modifications to properties.

The ban is explained as helping combat money laundering and terrorism financing. Earlier in August seven people were arrested in Qatar for trying to launder illegally acquired money by buying luxury cars for cash and then exporting them.