At the beginning of the pandemic there were calls to avoid using cash for sanitary reasons. Contactless electronic payment was the recommended method of transacting.
Last spring cash withdrawals from cash machines sank by 50% in Switzerland, according to the SIX Group. Across the whole of 2020, cash withdrawals from Swiss cash machines was down 23% and contactless payments were up, according to Le Temps.
However, despite rising cashless payments and reduced use of cash machines, the volume of cash demanded rose, a phenomenon observed in Switzerland and the eurozone. And the trend intensified during the pandemic with the value of euro notes in circulation rising 11% in 2020.
What is going on?
In times of crisis people save more, something that intensified in Switzerland and the eurozone during the Covid-19 crisis. Much of the growth in demand for cash was for large denominations, the kinds of notes kept as a store of value rather than transacting. Another driver of this trend is low interest rates. Cash provides the same return as money held in a bank account.