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

Author

Listed:
  • Heng Chen
  • Walter Engert
  • Kim Huynh
  • Gradon Nicholls
  • Julia Zhu

Abstract

We conduct a follow-up to Chen et al. (2020) and study demand for and use of cash after the containment measures imposed at the beginning of the COVID-19 pandemic were relaxed during the summer of 2020. We find that bank notes in circulation continued to rise in July due to ongoing cash withdrawals and decreased cash deposits in the Bank Note Distribution System. The probability of consumers using cash for payments increased in July compared with April 2020. As well, consumer cash holdings, measured as the median value of cash on hand, returned to August 2019 levels.

Suggested Citation

  • Heng Chen & Walter Engert & Kim Huynh & Gradon Nicholls & Julia Zhu, 2021. "Cash and COVID-19: The Effects of Lifting Containment Measures on Cash Demand and Use," Discussion Papers 2021-3, Bank of Canada.
    • Handle: RePEc:bca:bocadp:21-3
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    References listed on IDEAS

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    1. repec:fip:a00001:89583 is not listed on IDEAS
    2. Gerrit Bilkes, 1997. "The new bank note distribution system," Bank of Canada Review, Bank of Canada, vol. 1997(Summer), pages 41-54.
    3. Christopher Henry & Kim Huynh & Gradon Nicholls & Mitchell Nicholson, 2019. "2018 Bitcoin Omnibus Survey: Awareness and Usage," Discussion Papers 2019-10, Bank of Canada.
    4. Christopher Henry & Kim Huynh & Rallye Shen, 2015. "2013 Methods-of-Payment Survey Results," Discussion Papers 15-4, Bank of Canada.
    5. Heng Chen & Walter Engert & Kim Huynh & Gradon Nicholls & Mitchell Nicholson & Julia Zhu, 2020. "Cash and COVID-19: The impact of the pandemic on demand for and use of cash," Discussion Papers 2020-6, Bank of Canada.
    6. Heng Chen & Q. Rallye Shen, 2019. "Variance Estimation for Survey-Weighted Data Using Bootstrap Resampling Methods: 2013 Methods-of-Payment Survey Questionnaire," Advances in Econometrics, in: The Econometrics of Complex Survey Data, volume 39, pages 87-106, Emerald Group Publishing Limited.
    7. Heng Chen & Q. Rallye Shen, 2017. "Variance estimation for survey-weighted data using bootstrap resampling methods: 2013 methods-of-payment," Canadian Stata Users' Group Meetings 2017 13, Stata Users Group.
    8. Christopher Henry & Kim Huynh & Angelika Welte, 2018. "2017 Methods-of-Payment Survey Report," Discussion Papers 18-17, Bank of Canada.
    9. Mitchell, Olivia S. & Lusardi, Annamaria (ed.), 2011. "Financial Literacy: Implications for Retirement Security and the Financial Marketplace," OUP Catalogue, Oxford University Press, number 9780199696819.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Heng Chen & Walter Engert & Marie-Hélène Felt & Kim P. Huynh & Gradon Nicholls & Daneal O'Habib & Julia Zhu, 2021. "Cash and COVID-19: The impact of the second wave in Canada," Discussion Papers 2021-12, Bank of Canada.
    2. Rajas Saroy & Sakshi Awasthy & Naveen K. Singh & Sonali M. Adki & Sarat Dhal, 2022. "The Impact Of Covid-19 On Digital Payment Habits Of Indian Households," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(Special I), pages 19-42, March.
    3. Jacek Pietrucha, 2021. "Drivers of the Cash Paradox," Risks, MDPI, vol. 9(12), pages 1-17, December.
    4. Heng Chen & Walter Engert & Kim Huynh & Daneal O’Habib & Joy Wu & Julia Zhu, 2022. "Cash and COVID-19: What happened in 2021," Discussion Papers 2022-8, Bank of Canada.
    5. Christopher Henry & Matthew Shimoda & Julia Zhu, 2022. "2021 Methods-of-Payment Survey Report," Discussion Papers 2022-23, Bank of Canada.
    6. Jonker, Nicole & van der Cruijsen, Carin & Bijlsma, Michiel & Bolt, Wilko, 2022. "Pandemic payment patterns," Journal of Banking & Finance, Elsevier, vol. 143(C).
    7. Walter Engert & Kim Huynh, 2022. "Cash, COVID-19 and the Prospects for a Canadian Digital Dollar," Discussion Papers 2022-17, Bank of Canada.
    8. Ashworth, Jonathan & Goodhart, C. A. E., 2021. "The great Covid cash surge - digitalisation hasn't dented cash's safe haven role," LSE Research Online Documents on Economics 112432, London School of Economics and Political Science, LSE Library.
    9. Anton Schautzer & Helmut Stix, 2022. "Past and future development of euro cash in Austria – resilience in light of technological change and economic crises," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/22, pages 21-46.

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    More about this item

    Keywords

    Bank notes; Central bank research; Coronavirus disease (COVID-19); Digital currencies and fintech; Econometric and statistical methods;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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