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The Great Covid Cash Surge - Digitalisation Hasn't Dented Cash's Safe Haven Role

Author

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  • Goodhart, Charles
  • Ashworth, Jonathan

Abstract

The pandemic fuelled a remarkable surge in currency in circulation across most countries, with cash once again defying premature obituaries of its demise. The somewhat enforced intensification of the digitalisation of economies clearly appears to have further diminished cash’s role as a medium of exchange. However, other important aspects of digitalisation, such as the growth in private digital currencies, haven’t weakened cash’s role as a store of value. The recent experience shows that in a major crisis people still want to retreat to the security and safety of holding bank notes, especially large denomination notes, to provide reassurance. When in trouble, people want to go back to the tried and true; in this respect holding paper money in their wallets.

Suggested Citation

  • Goodhart, Charles & Ashworth, Jonathan, 2021. "The Great Covid Cash Surge - Digitalisation Hasn't Dented Cash's Safe Haven Role," CEPR Discussion Papers 16618, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16618
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    More about this item

    Keywords

    Cash; Banknote issue and withdrawal; Covid 19; Panic response;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E49 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Other
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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