Cash and COVID-19: The Effects of Lifting Containment Measures on Cash Demand and Use

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We provide an update on previous research by Chen et al. (2020) on the impact the COVID-19 pandemic has had on the demand for cash and the use of various methods of payment. We use recent data from two sources:

  • the Bank Note Distribution System on the amount of cash in circulation
  • cash use surveys of Canadians conducted in April and July 2020

Our key findings are as follows:

  • Cash in circulation increased from $83 billion before the pandemic to more than $96 billion in late September 2020. We break down this increase into withdrawals from and deposits to the Bank. We find that withdrawals normalized by mid-summer, while deposits have remained low.
  • In September 2020, cash growth increased by $13.1 billion compared with September 2019. If 2020 had been a typical year, we would have expected an increase of $4.7 billion in cash compared with September 2019. We base these predictions on the average weekly growth rates between 2017 and 2019.
  • Canadians’ self-reported cash-on-hand holdings returned to pre-pandemic levels (median $70) in July after increasing in April (median $85). Use of all payment methods (measured by the percentages of Canadians using them) increased in July compared with April, but cash saw the largest increase. This coincides with a relaxation of containment measures and a corresponding increase of purchases made in stores.
  • More than half of Canadians used cash as a form of payment during the July survey period, which was somewhat less than the proportion using debit and credit methods. So while electronic methods continued to dominate, a large percentage of Canadians also used cash for payments, and that share increased from the spring into the summer.
  • A large majority of Canadians continue to report that they have no plans to go cashless in the next five years.