There is a perception within New Zealand that we are, as a whole, moving towards a cashless society. Research by Mastercard done earlier this year claimed that 90 percent of New Zealanders prefer electronic methods of payment. “New Zealanders are embracing ways to pay that are fast, convenient and secure. Acceptance of card payments, and increasingly contactless payments, means New Zealanders are less reliant on cash for everyday transactions,” said Peter Chisnall, country manager for New Zealand and the Pacific Islands, said of the study.
However, this is in stark contrast to recently released figures from the Reserve Bank of New Zealand, which show that the amount of cash in circulation is increasing year on year – figures which they admit “may come as a surprise”. There is now four times the number of $100 in circulation and five times the number of $100 notes. The amount of cash has risen from $1.64 billion in 1998 to $5.2 billion.
This can largely be put down to rising levels of immigration. When people move from countries with largely cash economies, such as those in Asia, they bring with them the same cultural attitudes and are much slower to take up electronic methods of payment. The result is more cash in circulation, and as immigration continues to rise the amount of cash being used will continue to rise alongside it.
The events of February 2011 also play a part. When the 6.3 magnitude earthquake struck Christchurch, it knocked out power to much of the city. This meant that all electronic payment systems were unavailable, and overnight New Zealand’s second largest city (at the time) reverted to a cash economy. In response to the earthquakes and ongoing aftershocks, and subsequent earthquakes in Wellington and other parts of the country, it seems as though people are heeding the advice of Civil Defence and keeping large amounts of cash on hand in the event of such a crisis.
Also a factor, albeit perhaps not as significant as migration or fear of a natural disaster, is new currency designs. Every country in the past two decades which has changed its currency has seen an increase in cash held by the public immediately after the change.