BEGINNING OF THE APOCALYPSE? CANADIANS TURN TO CASH AS A HEDGE AGAINST CHAOS IN THE WORLD. Daniel Whyte III President of Gospel Light Society International says, many Americans are doing the same and have been doing so for a while. People, unless they are rich, who are living off of credit cards and loans are not wise considering the chaos happening in the world and that will happen

A Bank of Canada survey has found the demand for cash has actually increased. PHOTO BY BRENT LEWIN/BLOOMBERG

BEGINNING OF THE APOCALYPSE? CANADIANS TURN TO CASH AS A HEDGE AGAINST CHAOS IN THE WORLD. Daniel Whyte III President of Gospel Light Society International says, many Americans are doing the same and have been doing so for a while. People, unless they are rich, who are living off of credit cards and loans are not wise considering the chaos happening in the world and that will happen.

A Bank of Canada report suggests cash has become something to hoard, rather than spend.

Instead of killing cash, the pandemic might have saved it.

Canadians used bills and coins to make only 22 per cent of payments in 2021, compared with 33 per cent in 2017 and 54 per cent in 2009, according to the Bank of Canada’s latest Methods of Payments Survey, a comprehensive analysis of the payments landscape that the central bank conducts every four years.

That trajectory suggests Canada is on track to becoming a cashless society. Indeed, a quarter of respondents told the central bank that they had no cash in their wallets or at home, compared with 11 per cent who reported being cashless in 2017.

The Bank of Canada is in charge of keeping enough bills in circulation. PHOTO BY BRENT LEWIN/BLOOMBERG

Except the survey found that demand for cash had actually increased. Overall, Canadians reported having an average of $127 of cash “on hand,” compared with $106 in 2017, an increase that was greater than inflation over that period, the central bank observed. Canadians were holding considerably fewer $5 bills, while demand for $20, $50 and $100 bills increased from 2017, suggesting cash was becoming something to hoard rather than something to spend.

Apocalypse now? Not exactly, but the demand for cash appears to relate to a desire among Canadians to establish a hedge against economic crisis, geopolitical uncertainty and maybe even technological failure, considering the degree to which the collapse of Rogers Communications Inc.’s systems crippled day-to-day commerce this summer.

“Uncertainty due to the pandemic drove increased demand for cash over and above the stable level of growth observed in past decades,” concluded the Bank of Canada report, which was published on Dec. 28.

Demand for cash matters for the Bank of Canada because it’s in charge of keeping enough bills in circulation. Canadians’ desire for cash is also relevant in discussions over whether the central bank should introduce a digital unit of exchange, as a sharp turn away from hard currency would argue in favour of a creating a Central Bank Digital Currency. The central bank said it will produce the Methods of Payments report annually from now on, as “developments in the payments landscape in general are ongoing and fast-changing.”

Source: Financial Post, Stephanie Hughes

To read more, click here: https://financialpost.com/news/economy/canadians-hoard-cash-hedge-against-chaos