“We still have $ 50 banknotes in stock, but order adjustments have been made to maintain adequate inventory over the next few weeks,” the statement said.
“This adjustment is due to higher than expected demand in recent months, and ahead of our regular inventory replenishment expected by the end of the summer. This measure, which only affects the face value of $ 50, is temporary and will be lifted as soon as possible. ”
The Bank of Canada couldn’t clarify why demand had increased for the $ 50 in particular, but it released a staff discussion paper earlier this month that shows there was a spike in demand for all banknotes – although the $ 20 and $ 50 bills were the most popular – in April and May, compared to the past five years.
The report indicates three likely reasons for the increase in banknotes in circulation:
- Precautionary measures by banks to increase their liquidity stocks during the pandemic;
Banks have also attracted more money to offset disruptions in cash flow from retailers affected by the pandemic; and,
increased consumer demand for banknotes.
In the statement, the Bank of Canada said it believes the increase in consumer demand “is significant.”
What’s more, the report says Canadians on average held $ 22 more in cash during the pandemic, compared to the same months last year, while 35 percent of Canadians decreased their overall cash consumption.
Another 30 percent of respondents said they did not use cash at all, but “a significant proportion of those respondents had cash on hand,” according to the report.
Even though Canadians are withdrawing more money, there are fewer places to spend it. Several companies in recent months, including Loblaws, Metro and Tim Hortons, have been encouraging customers to avoid cash payments, while other companies are refusing all of this.
The Bank of Canada, for the record, has urged businesses to continue accepting cash, but to sanitize money like a doorknob or gas pump.
CASH HOARDING AN INTERNATIONAL PROBLEM
Money hoarding doesn’t just happen in Canada.
A report from the UK’s Center for Economic Policy Research shows that cash in circulation has increased in the US, Italy, Spain, Germany, France, Australia, Brazil and Russia, to no avail. name a few.
“While economic shutdowns and increased use of online retailing are currently diminishing the traditional function of cash as a medium of exchange, it appears to be more than offset by panic hoarding of banknotes. The report says.
In the United States, pandemic hoarding, combined with companies’ denial of liquidity, has led to a coin shortage. This shortage led to the creation of the US Coin Task Force, which aims to “identify, implement and promote actions aimed at reducing the consequences and duration of disruptions linked to COVID-19 on the normal circulation of coins”.
Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) has issued a warning against hoarding money during the pandemic, citing consumers losing a layer of protection provided by a bank and increasing the safety risk for the consumer.