40 years: Executive leadership & banking
As a supplement to his video "The Changing Role of Cash in the Economy", Sir Mark Boleat explains why cash in circulation has been increasing, despite the declining use of it.
As a supplement to his video "The Changing Role of Cash in the Economy", Sir Mark Boleat explains why cash in circulation has been increasing, despite the declining use of it.
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4 mins 5 secs
It is very clear that there has been, and continues to be, a sharp reduction in the use of cash to make payments. This is true not only in Britain, but in many other countries as well. However, the amount of cash in circulation, far from reducing, has actually been rising. The key point is that cash payments represent a flow, whereas cash in circulation represents a stock.
Key learning objectives:
How has cash payments and cash in circulation changed over the last decade?
Why has cash in circulation not fallen in line with the reduction in cash to finance transactions?
What can explain the rise in cash holdings?
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On average, people probably hold the same amount of cash now than they did five years ago, but instead of visiting a cash machine every two weeks, it may now be every four weeks. Hence, the number of transactions fall, but the average amount of cash held increases.
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