The death of cash has been “greatly exaggerated”, according to a new report from the San Francisco Federal Reserve, which found that currency in circulation (CIC) has grown faster than GDP in the majority of countries over the past decade.

CIC measures the total amount of cash held by the public, including businesses, banks and consumers. When people want to hold more cash, the central bank adds cash into the banking system, resulting in an increase in CIC.

Norway and Sweden were the only countries in the study where CIC growth did not match or outpace the growth of GDP. Some countries like Mexico and South Korea saw CIC outpace GDP by more than 100 percentage points.

The study attributes the boost in demand for cash to very low interest rates in many countries over the past decade, as well as uncertainty following the global financial crisis.

Norway’s central bank acknowledged that cash’s role “continues to diminish” as consumers move towards electronic payments. The country’s largest bank, DNB, has eliminated cash in its branches, explaining that only six per cent of Norwegians use cash on a daily basis. The bank has also proposed that Norway eliminate the 1,000 kroner note.

Since the 1960s, Swedish banks have encouraged digital bank transfers, charged for cheques and invested heavily in card payment systems. The country’s banking sector collaborated to create an automated clearing house, Bankgirot, and to launch a popular mobile payments app, Swish. Sweden also has a cultural stigma against cash, with some Swedes associating the payment method with crime.

The report concludes: “A look at the data shows that Mark Twain’s wise words ring true: reports of the death of cash have been greatly exaggerated. A few countries have managed to move away from notes and coins, in favour of digital payments. But despite the plethora of digital options, in most countries, demand for notes and coins is strong and shows no signs of slowing down.”

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