25 June 2021

Demand for coins and notes surges in Australia, despite COVID-19 cash shun

| Damien Larkins
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Blank coins fall from conveyor belt at Royal Australian Mint

Orders of new coins from the Royal Australian Mint have spiked despite the ongoing COVID-19 pandemic. Photo: Royal Australian Mint.

Demand for coins has doubled and demand for notes has tripled in Australia during the past year despite a push for cashless transactions in the COVID-19 pandemic.

It seems almost every business now has signs encouraging customers to use card or electronic transfer instead of cash to lower the risk of COVID-19 transmissions.

So it comes as a surprise that demand for cash has significantly risen.

The Royal Australian Mint in Canberra says it put approximately 175 million new coins into circulation during the 2020-2021 financial year.

That’s almost twice the 91 million total in 2019-2020.

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Royal Australian Mint’s chief executive officer, Leigh Gordon, said it was unexpected.

“We’ve been quite surprised by the demand for coins we’ve seen during the past 12 months,” he said.

“[It’s] more demand for circulating coins than we expected across the period of COVID-19.”

The Reserve Bank of Australia (RBA), which oversees the nation’s banknote production and circulation, also saw a surge in demand during the pandemic.

An RBA report released in March this year found that from March 2020 to February 2021, the value of banknotes in circulation rose 17.1 per cent to $97.3 billion.

That’s more than triple the average growth of five per cent per year during the past decade.

A hand takes several notes of Australian currency from a wallet

The Reserve Bank of Australia says people are holding onto cash, especially $50 notes, as a precaution. Photo: Damien Larkins.

Demand grew mostly for larger notes, with $50 notes comprising around 70 per cent and $100 notes 20 per cent.

The RBA puts the spike down to people holding onto cash as a precaution or to store wealth.

“The demand for cash during the COVID-19 pandemic has likely been driven by hoarding behaviour,” said the report.

“[Possibly] a general sense of uncertainty or because they were concerned about possible disruptions to electronic payment systems during the pandemic.”

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Mr Gordon said notes and coins are generally preferred for small transactions by older people and in teaching financial literacy.

But cash in hand also provides a sense of security during tough times.

“People just take hold of their cash across the period of uncertainty,” said Mr Gordon.

“[In] the bushfires that we had, there was a time there down on the South Coast where the EFTPOS machines were down and there was no power.

“You had to pay for your fuel with cash.”

'Cashless payment only' sign at cafe in Canberra

Most businesses moved away from cash transactions during the COVID-19 pandemic. Photo: Damien Larkins.

The majority of the extra production was for the lower-denomination silver 5 cent, 10 cent, 20 cent and 50 cent coins.

Interestingly, $1 coins didn’t experience the initial spike in demand.

Mr Gordon said the South Australian Government’s move to allow poker machines to accept notes in late 2019 caused the anomaly.

“[Gaming organisations] actually gave their stocks of $1 coins back into the circulating pool and they got redistributed,” he said. “So we went for a few months where there weren’t many $1 coin demands.

“But they have started up again with the recent demands from the banks. The system has rebalanced itself.”

A pile of new $1 coins at Royal Australian Mint

The $1 coin was least in demand during the COVID-19 pandemic due to an influx from South Australia. Photo: Royal Australian Mint.

Stockpiles of coins are held by the Royal Australian Mint to accommodate demand fluctuations and trends.

But it can ramp up production when required.

“We can see that buffer stock starting to be drawn down on and we can start producing it ourselves,” said Mr Gordon.

“We can respond in three months to something like this.”

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The Royal Australian Mint doesn’t expect coin demand to snap back to pre-pandemic levels any time soon.

“It’s been a blip up to a new level that’s going to start decaying down,” said Mr Gordon.

“We’re expecting increased demand will probably reduce, but will continue at a higher number during the next couple of years.”

He said the Royal Australian Mint is focusing on growing investment in collectible coins in the long-term future.

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Went to Capital Brewery and ordered a round of drinks. Went to pay cash and told card only. So I left drinks on counter and haven’t been back. Cash is legal tender….

Cash may well be legal tender but there is no requirement to accept it.

Australian business may set commercial terms which stipulates what payment methods will be accepted. When you buy something you are entering into a contract of sorts where you accept those terms.

If you don’t want to accept those terms you are free to go somewhere else. The choice is yours.

I couldn’t tell you the last time I used (or even had) cash. 2017-18 maybe? And there has been no need to carry credit or debit cards for a couple of years either as they can all be stored on your phone or watch. Can we hurry up and get drivers licenses and passports electronically too please!

I rarely use cash now. Mostly I use a credit card, as I like the points. I pay off the credit card each month, so never incur interest. The points add up. One time I got $1,500 back and another $800. In the past I have also got airline tickets for points. Don’t get plane tickets now, as I can find better deals, so take the cash. I wouldn’t have got that if I had used cash. I put everything that I can on my credit card.

I do use cash occasionally, if say in a situation where I can bargain.

Adding, I do carry some cash, and when travelling have enough to use if the internet goes down. I struck this at a roadhouse in the middle of the NT. The phone line went down and therefore credit cards couldn’t be used. ‘CASH ONLY” signs were stuck to the petrol pumps. It was a looonnnnnggg way to the next petrol station. Although I use my credit card mainly, I do have enough cash for emergences for situations like that, and I was able to fill my car and drive on. Anyone without cash would have needed to wait for the phone line to be fixed. (For those, camping was available :D)

russianafroman12:41 pm 27 Jun 21

Cash is objectively better and I can see why certain bankers want it to be “phased out” under the guise of “Covid”. A good rule is if your transaction requires a pin you should be using cash

Definitely, objectively better. Cash is so much more convenient, I can carry around as much as I want without fear of being mugged, it doesn’t take up space, I can use it on the internet, I can use all the check out aisles at the supermarket… Objectively.

Nah I think its the tooth fairy needing more $1 and $2 coins!

Capital Retro11:50 am 26 Jun 21

With savings bank and term deposit interest rates almost zero why risk your cash by parking it in a bank account where one flick of a switch can make it disappear forever?

I have noted also that change from supermarkets mostly, following the weekly grocery journey, are largely circulated commemorative coins and I can’t figure out why.

Commemorative coins are easier to track. Smaller runs, phased out quickly… Think about it.

Capital Retro9:32 pm 01 Jul 21

I am talking about previously released ones that are being recirculated. No sign of the new ones like the “donation dollar”.

I stopped going to David Jones, JBHF and coffee shops like Red Brick in Curtin that arrogantly refused to accept cash for small purchases. They said it was because of covid, but more likely were using covid as an excuse for the convenience of not having to bank notes and coins. Most places are very happy to accept our cash during times when visitor numbers are down.

Capital Retro5:49 pm 26 Jun 21

The Erindale Cakery Bakery (best pies in town) only accept cash.

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