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Cash demand in times of crises

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  • Rösl, Gerhard
  • Seitz, Franz

Abstract

In this paper, we focus on the role of different types of crises (technological crises, financial market crises, natural disasters) and their effects on the demand for cash in an international context. It becomes evident that over the past 30 years cash demand always increased in times of crises, independent of the nature of the crisis itself.However, the type of crises determines whether small or large banknote denominations are affected more. In case of payment uncertainties, we find a crisis-related increased demand for small denominations, probably reflecting an increased demand for transaction balances. In times of uncertainties regarding the financial and/or general economic development (also possibly driven by natural disasters), large banknote denominations were comparatively more in demand indicating that the crises-related need for non-transaction balances was the dominant driver.

Suggested Citation

  • Rösl, Gerhard & Seitz, Franz, 2021. "Cash demand in times of crises," Weidener Diskussionspapiere 83, University of Applied Sciences Amberg-Weiden (OTH).
    • Handle: RePEc:zbw:hawdps:83
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    References listed on IDEAS

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    1. Ruchir Agarwal & Miles Kimball, 2015. "Breaking Through the Zero Lower Bound," IMF Working Papers 2015/224, International Monetary Fund.
    2. Sayuri Shirai & Eric Alexander Sugandi, 2019. "Growing Global Demand for Cash," International Business Research, Canadian Center of Science and Education, vol. 12(12), pages 1-74, November.
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    2. Rösl, Gerhard & Seitz, Franz, 2024. "Uncertainty, politics, and crises: The case for cash," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).
    3. Batiz-Lazo, Bernardo & Maixe-Altes, J Carles & Peon, David, 2023. "Behavioral drivers of cashless payments in Africa," MPRA Paper 117984, University Library of Munich, Germany.
    4. Pitters, Julia, 2023. "Psychologische Aspekte von Bargeld in Not- und Krisenzeiten," IU Discussion Papers - Social Sciences 5 (September 2023), IU International University of Applied Sciences.

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    More about this item

    Keywords

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    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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