Australian Banking Association’s Anna Bligh said consumers felt comfortable keeping money in jar


The head of Australia’s banking lobby has admitted many consumers felt more comfortable keeping a thousand dollars in a kitchen jar than in the bank.

During the lockdowns, many shops have refused to accept cash despite the very low risk of catching Covid off banknotes, and instead preferred to be paid with tap and go.

Despite that, the Reserve Bank of Australia has been printing more money for people to withdrawn from ATMs.

Anna Bligh, the chief executive of the Australian Banking Association, said having physical cash gave many people a sense of security.

‘Their explanation for this is that people still derive emotional and psychological comfort from having a thousand dollars in cash in the jar in the kitchen cupboard,’ she told the Committee for Economic Development of Australia on Tuesday night.

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The head of Australia's banking lobby has admitted many consumers felt more comfortable keeping a thousand dollars in a kitchen jar than in the bank. Anna Bligh, the chief executive of the Australian Banking Association, said having physical cash gave many people a sense of security

The head of Australia’s banking lobby has admitted many consumers felt more comfortable keeping a thousand dollars in a kitchen jar than in the bank. Anna Bligh, the chief executive of the Australian Banking Association, said having physical cash gave many people a sense of security

‘It’s not something that’s easily predictable in terms of what people feel comfortable with.’

A Reserve Bank of Australia issues paper said consumers were continuing to withdraw large sums of money from teller machines.

The value of banknotes in circulation has surged since the first case of Covid came to Australia, climbing by 20 per cent between February 2020 and October 2021.

Last month, $100 billion worth of banknotes changed hands, double the value of 2010. 

Ms Bligh, a former Queensland Labor premier, argued trust in banks had actually increased during the pandemic, despite the banking royal commission, as lenders allowed borrowers to defer their mortgage repayments. 

‘Institutions which have not enjoyed a lot of trust and have watched trust get eroded  – whether that’s banking, corporate Australia generally, government – you’ve seen a recovery,’ she said.

‘Because when it really counted, people saw Australian banks behave in a way that perhaps they had not expected them to do.’

During the pandemic, many shops have refused to accept cash instead preferring to be paid with tap and go (pictured is a sign at Harris Farm Markets in Sydney)

During the pandemic, many shops have refused to accept cash instead preferring to be paid with tap and go (pictured is a sign at Harris Farm Markets in Sydney)

But Ms Bligh said large amounts of money were still being withdrawn, to have as a store of value.

‘The rate of cash being used for transactions is just plummeting and most merchants said in early Covid particularly we’re not going to take cash,’ she said.

‘They were worried it was a source of infection and transmission for their staff and their customers.’ 

The RBA blamed worries about the Covid pandemic and lockdowns for the surge in consumers keeping money physically rather than leaving it in the bank, noting this was particularly prevalent during a crisis.

‘The store-of-wealth function performed by banknotes is particularly important during times of financial and economic uncertainty, such as the Global Financial Crisis and the Covid-19 pandemic,’ it said.

Despite that, the Reserve Bank of Australia has been printing more money for people to withdrawn from ATMs

Despite that, the Reserve Bank of Australia has been printing more money for people to withdrawn from ATMs

Even if Australians aren’t using cash for daily transactions like they did before the pandemic, they were still treating it like gold.

‘Cash is increasingly used as a store of wealth,’ the RBA said.

In 2018, two years before the pandemic, three-quarters of banknotes were ‘estimated to be hoarded’.

That added up to between $50 billion and $75 billion in cash, the equivalent of about 13 per cent of Westpac’s entire deposits of more than $600 billion, based on its full-year annual report.

Since the pandemic, high denomination notes are the most likely to be circulating with 73 per cent of the bills being $50 and $100 banknotes.

A Reserve Bank of Australia issues paper said consumers were continuing to withdraw large sums of money from teller machines. The value of banknotes in circulation has surged since the first case of Covid came to Australia, climbing by 20 per cent between February 2020 and October 2021 (pictured is a Commonwealth Bank ATM)

A Reserve Bank of Australia issues paper said consumers were continuing to withdraw large sums of money from teller machines. The value of banknotes in circulation has surged since the first case of Covid came to Australia, climbing by 20 per cent between February 2020 and October 2021 (pictured is a Commonwealth Bank ATM)

The Reserve Bank said pandemic changes made automatic teller machines much costlier to operate, resulting in thousands being removed around the country like phone booths.

‘The declining use of cash for retail payments, accelerated by the Covid-19 pandemic, has placed pressure on the current cash distribution system,’ it said.

‘Specifically, lower processing volumes have led to under utilisation of cash distribution infrastructure and increased the average cost of transporting and processing banknotes.’

Even before the pandemic in 2019 just 32 per cent of in-person transactions were done with cash.

High cash users were more likely to be older, have a lower income, live in a regional area, or have limited internet access.

‘The majority of these high cash users indicated that they would suffer a major inconvenience or genuine hardship if they could no longer withdraw cash or if retailers stopped accepting cash,’ the RBA said.



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