IMPACTS OF RECENT DEVELOPMENTS ON THE CASH CYCLE: A GLOBAL ANALYSIS…
During the recent Currency Conference one important discussion theme was the impact of recent developments on the cash infrastructure. If the transactional use of cash is decreasing even if its value in circulation is still increasing, the unit costs of its management will increase.
This may create difficulties to maintain and develop the cash infrastructure.
IACA would like to continue the debate and use recent article published by Currency News (CN) as basis for discussion. In March, CN published an article by Antti Heinonen titled “Impacts of Recent Developments on the Cash Cycle: A Global Analysis.
You can read the full article HERE: https://currencyaffairs.org/wp-content/uploads/2025/06/Anttis-article-June-2025.pdf
The article raises a few questions as seen below. Please give us your feedback and let’s get some discussion going on this topic!
For our Central Bank Members— the article highlights the importance to develop representative metrics to understand the status of the cash infrastructure and to consider volume developments (not just the value metrics) of cash related activities. In light of this:
- Are you regularly following the development of banknote flows (processing, lodgements, withdrawals and destruction)? In case you are, have you had similar experience as depicted in Figures 2 and 5 of the article.
- Several central banks publish figures on banknote flows only in value terms. Do you have arguments in favor of following the value developments instead of volume developments as suggested in the article?
- Are the decreasing trends already an issue in your country and have you considered solutions with your national stakeholders?
- Any other comments regarding metrics to measure volume development?
For all members: Figure 5 in the article represents a preliminary attempt to find a metric for two components of the cash cycle: the return frequency and destruction of banknotes. The results (indicating decreasing volumes of banknotes) are not surprising considering the recent efforts have focused on the efficiency of the cash cycle and on the increase of the note lifetime by introducing more durable substrates.
- For those countries with decreasing volumes in the cash cycle (like those depicted in Figures 2 and 5, where do you see the greatest vulnerabilities in your cash infrastructure and are you aware of any specific actions to help mitigate the risks?
- For those countries flush with cash, what do you see as the biggest threat or challenge in the status quo.
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