Record jump in cash in circulation

During the pandemic Poles did not seem to trust banks. They withdrew cash from ATMs en masse. In March and April there were [...] https://www.pinterest.com/pin/1085437947660215829/

During the pandemic Poles did not seem to trust banks. They withdrew cash from ATMs en masse. In March and April there was over 46 billion PLN in circulation. A record-breaking jump in cash in circulation The latest data from Bank Pekao show that in April alone the value of cash in circulation amounted to PLN 272.8 billion. This is PLN 20.2 billion more than a month earlier. In March, the increase amounted to PLN 26.3 billion. Nominally, it was the biggest jump in history. In March 2020, cash in circulation was 21.3% more than a year earlier. In April it was already 29.4%. This is the highest result in the history of this type of data. This dates back to 1998, a period when payments by card and through the network were not yet so popular - to put it mildly. What is going on? What is the reason for it? Theoretically, in the time of the pandemic, Poles should want to pay for purchases using cards and the web in order not to get infected with the coronavirus. But this was not the case. Maybe it was because of fake news that could be found on the Internet, which suggested that banks were running out of banknotes and coins? Or was it something else? The fear of bank failures that we remember from 2008 returned? "Apparently, Poles withdrew cash en masse for fear of electronic payment disruptions," - economists of Santander Bank Polska, in turn, claim. "One can also add that in April Poles simply had fewer opportunities to spend cash (which would have turned into corporate deposits), and besides, the functioning shadow economy in the sectors covered by the freeze (e.g. hairdressing services) required the use of physical money. At the same time, NBP data show that households withdrew money from deposits in April (PLN -12.4 billion, -11.3% y/y). This is probably related to an increasingly worse interest rate offer, resulting from rate cuts by the Monetary Policy Council. Some of the funds withdrawn from deposits could have been used to purchase Treasury bonds, which were selling exceptionally well in April," Michał Żuławiński adds. - adds Michał Żuławiński on bankier.pl. Tags bank cash NBP