Despite the apparent shunning, by the masses, of cash, the amount of cash in circulation has never been higher - and there was plenty of it moving around before the start of the lockdown

Despite the apparent shunning, by the masses, of cash, the amount of cash in circulation has never been higher - and there was plenty of it moving around before the start of the lockdown

It has been one of the great contradictions in recent years.

We all hear and talk about how nobody uses cash these days. With all the alternatives, why bother?

The Reserve Bank has been doing a lot of work on the future of cash and is conscious that those who still use cash don't be marginalised.

And clearly some people still do.

The numbers do not lie. 

Reserve Bank figures have shown that the amount of cash in circulation keeps going up even as all the talk is about nobody using cash.

Then you throw a pandemic in the mix and, well, things go a bit crazy.

Whether this all drove some people to open 'mattress accounts' by taking out and stashing some hard cash we'll never know. That's not the sort of thing people talk about. But there certainly was a bit of activity in the run-up to New Zealand going into lockdown in late March.

The RBNZ releases annual figures on cash in circulation, based on how much was in circulation as of the last Wednesday in March.

Of course this year the last Wednesday in March just happened to be right on the cusp of when we went into lockdown.

The result was over $1 billion more in the hard folding stuff was out there as at March 25, 2020 than had been the case a year earlier. Total cash in the hands of the public was just under $7.318 billion, compared with $6.285 billion (the previous record) a year earlier.

The big stuff was in vogue, with over $3 billion worth of $50 notes (up over half a billion dollars on a year earlier) and well over $2.5 billion in $100 notes (up from over $2.2 billion). 

'A significant uplift'

In an explanatory note with the figures the RBNZ said the cash in circulation "involved a very significant uplift from 2019".

"This was caused by an unprecedented demand for cash from system participants (banks, retailers, the public) in the days leading up to the COVID-19 pandemic lockdown in New Zealand, which commenced at 11.59pm on 25 March 2020. It is expected a large portion of this increase will be returned to the Reserve Bank once the pandemic is over."

We were interested in getting a little more information on the build up of the amount of cash out there and what happened in the run-up to the lockdown, so we approached the RBNZ for more information and the big five banks to see what they could tell us about cash movements before the lockdown.

The RBNZ for its part issued several media releases prior to and during the lockdown, basically reassuring that the financial system was working well and there was plenty of cash. And it covers this subject in its Covid-19 page on the RBNZ website. 

In response to our queries an RBNZ spokesperson said the RBNZ and "wider cash sector" had been working together to ensure resilience and mitigate any potential service disruptions or demand changes due to Covid-19. This work began in February, ramping up to "intensive work" from early March.

'Large cash withdrawals'

"We had anecdotal reports from banks of an increase in large cash withdrawals by a small number of customers in the week or so leading up to lockdown," the spokesperson said. 

They said that data from the five major banks showed that the total value of cash withdrawals (all customer segments, over counter and ATM) in the seven days before lockdown (to 25 March), was about 10% up on the seven day period ending on 26 February, four weeks earlier.

"Cash withdrawals then fell in the first seven days of lockdown (ending 1 April) to about a quarter of the 26 February figure.   Four weeks into lockdown, the seven days ending 22 April saw a total value of cash withdrawals of about a third of the 26 February figure."

On the other side of that cash deposits (all customer segments, over counter and ATM) by total value over seven days went up about a third before lockdown (25 March) compared with four weeks earlier (ending 26 February).  Then, the seven-day totals were about 10% and 15% down on the February total for the periods ended 1 and 22 April respectively.

A separate series of data from the RBNZ for the March month showed some big swings due to the general fiscal stimulus and the wage subsidy, with bank deposits surging by some $4.5 billion in the month. 

The spokesperson said cash system dynamics fluctuate for seasonal reasons such as major holidays, tourism peaks, etc, and during response events such as natural disasters or pandemics.

'Cash levels will normalise'

"We expect that the level of cash on issue will begin to normalise over the coming weeks and months."

We asked the big five banks three questions:

1. Did your bank observe an increase in the amount of cash being withdrawn by customers ahead of the lockdown?

2. Did this cause any problems?

3. Has this withdrawal of funds now ceased?

This is what they said in response:


"We didn’t see anything out of the ordinary on withdrawals, and this continues to be the case. We have seen an increase in deposits."


1. Did your bank observe an increase in the amount of cash being withdrawn by customers ahead of the lockdown?
"We did see an increase in customers withdrawing money prior to lockdown, however we had increased the amount of cash we carried to ensure our branches and ATMs were well stocked in anticipation of this. We would like to take the opportunity to reassure our customers that while these are unusual circumstances, we have been continuing to manage cash stocks as usual, and this does not change our standard practice of ensuring cash is managed and handled in a safe manner."

2. Did this cause any problems?
"As above, there was a significant increase in withdrawals in the week before lockdown, however this did not cause any issues as ASB had increased its cash stock to cope with increased demand."

3. Has this withdrawal of funds now ceased?
"We saw cash withdrawals through lockdown drop significantly, as expected. Over the last week in level 3 we have seen a slight increase in activity."


"In the lead-up to lockdown and during lock down itself, we have seen lower levels of cash withdrawals across our ATM and branch network.

"Given the nature of COVID-19, we have seen the majority of our customers move to contactless payments wherever possible.

"As a bank, we are holding slightly higher levels of cash than we might otherwise as a prudent measure to ensure financial stability."


"Prior to lockdown we did experience higher than usual demands on cash which was to be expected given the circumstances. We saw the same sort of spikes after the Canterbury and Kaikoura earthquakes.

"We encourage our customers to talk through their options before exposing themselves to loss and risk by holding more cash than normal. With the range of digital, phone banking, and payment options available there are plenty of safer alternatives to withdrawing large amounts of cash.

"In short we were able to meet the short-term increase in demand for cash and levels are now back to more normal volumes."  


“Westpac NZ noticed a manageable increase in cash withdrawals in the lead-up to the Level 4 lockdown period. 

"We prepared for this anticipated increase by replenishing machines with cash more frequently. This is not an unusual occurrence, as we regularly plan for localised increases in cash withdrawals for major events such as concerts and sporting events.

"Cash withdrawals from ATMs reduced significantly during the Level 4 lockdown period.”

So, there you have it. The great cash bulge of 2020. Seemingly it's now over. And it will be interesting to see if the amount of cash that was in the hands of the NZ public as at March 25, 2020 proves to be an all-time high water mark as we move more and more to the cashless society.

Or will the folding stuff maintain some allure? People have been writing off gold for years.

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For the lockdown I doubt many would have needed large amounts of cash. But as a number of commenters have indicated this is likely to be a vote on trust in the banks and perceiving the threat to them and by them on depositors funds.

Personally I see any move to enforce a cashless society as banks entrenching their power and should be resisted vigorously.


Banks; especially overseas owned, are not to be trusted. I continue to withdraw my money out of them, as I believe the returns provided do not represent the risk.

These overseas banks are parasites on our local economy, and too many ex politicians are in bed with them in an attempt to keep their (lobbying) party going. Key has to be one of the most untrustworthy people we know of, and would rank right up there with the government asset raiders of the early 1990's; Fay Ritchwhite, Run over a swimmer jetskier Alan Gibb and the Viaduct Kings College Old Boys. You can add Douglas, Prebble, Richardson, Shipl and Cargill to that too.

Ask yourself, how does Keys conscience work when:
1. You orchestrate the sale of state assets when they return a positive cashflow to the government over the cost of borrowing, knowing 25% or more will go offshore when we have an income deficit of $10 billion per annum already.
2. You orchestrate an additional $200 billion in loans to his overseas mates, that achieved very little in terms of real growth with most going to the real estate ponzi scheme.

Answer. He has no conscience and would sell his grandmother if she was still alive. He doesn't deserve citizenship here. Let him go and join his mates in the states where coronavirus is running rampant.

Good Samaritian. You are very small minded. GRow up and come into the real World PLEASE

murray86 exactly

Guess the question comes to who is betting on deflation, then inflation? And if you think that, where are you investing your money?

My guess is to assets with long term value store and the least regulatory control. Precious metals and cryptocurrency are the only options I know of (certainly where I'm moving). Would be keen to hear others positions too.

those precious metals have become financialised by big hedge funds etc.

I don't have any cryptocurrency but I do own gold and gold mining stocks via NYSE and ASX.

I have a BTC portfolio which is up 30% in NZD over the past 18 months. ETH is 0% over same time period. XRP down 25%. I also own PMGOLD. Up about 60% in same time period. I consider these holdings as an alternative to cash.

I don't have any cryptocurrency but I do own gold and gold mining stocks via NYSE and ASX

Likewise. GDX has been a no brainer and procrastinated on buying more. However, we should acknowledge that gold miners are the speculative side of things, not cash alternatives.

How did you value your profits on those assets? Surely, not in terms! That's the whole point. Everything is value in fiat terms. Without that, everything else is valued at $zero and any other figure you may want to put on it.
Until we get back to valuing gold and bitcoin in term of how many pigs an ounce and a coin will buy, then cash; balances in the bank, is the basis of all of our 'wealth'.

How did you value your profits on those assets?

Fair question, and you're partly correct, I've assessed the increase in value in fiat. But that's kind of the point. One of the features of gold and Bitcoin is their scarcity relative to fiat.

I've seen gold valued in labour hours (for ex, how many hours you would need to work to buy an ounce of gold).

Hubs and I were mining bitcoin starting back in 2012. Both geeks & loved blockchain tech and the idea of decentralised currency. We still maintain a position amongst a range of cryptos mostly as a hedge against a financial collapse in the fiat/central bank system. Yes its also risky, but so is any store of wealth. We have never invested more than we could afford to lose. We also hold gold/silver and physical cash in NZ (and yes we were among the people making large withdrawals in March). Also cash and gold in other countries/currencies with deposit insurance. We sold out of all other investments over the last few years. We missed out on some gains but equally the cycle seemed overripe, we are not Warren B and didn't fancy our skills in timing the market with precision. We paid off all debt because we looked at the level of global debt and decided the odds on the next recession being a doozy were higher than in our lifetimes and wanted to sleep at night. Also, we are the oldest of the millennial generation, we buy avocados every week and have no regrets on that because avos are mad delicious.

Thanks Ginger. Not sure if that is satire or not.

Nope. All true.

Have you had a go at growing your own avos? Quite easy and there are a couple of miniature varieties at garden centres usually. We have about 7 varieties that cross pollinate merrily away and provide fruit thru a lot of the year.

Back to basics, with one eye on the future. PMs and Crypto here, with some long term shares also.

Yes I'm surprised this very question has received so little attention by the pundits. For anyone seeking to grow or preserve wealth from here on it seems the only question that matters. Inflation or deflation?

Surely if you where going to hold something as an emergency store of value it would be a precious metal rather than cash? After all cash indicates that you still have belief in a functional economic system. Gold indicates only that you believe a society will persist

...Firearms, seeds, bunkers etc. indicate you believe this is the end of society.

@squishy , its people who fear a run on one of our banks, and it could happen .

Immigrants to New Zealand , of which we have a few , will know all about banks collapsing , when depositors lost everything , and its recently happened in countries in South America , South Africa ,(FBC Fdelity Bank , New Republic Bank, Regal Bank , Sammbou , African Bank and VBS Bank ) Zimbabwe (numerous banks too numerous to list ), and India (quite a few including YES BANK in March 2020 which was a big no-no locking up $1,6 BILLION in savers money )

Indian folk are very suspicious of Banks , and they are well read , so they know whats going on , and understand the risks from their prior experience

Two banks have collapsed in the US in 2020

West Virginia state regulators closed The First State Bank this Friday, April 3rd. This is the second bank to fail in 2020, and it collapsed due to the coronavirus crisis.

Its astonishing that we dont have depositors insurance in place for our savings .

Yeah but if we did have deposit insurance instead of a TD earning 2.5% it might be more like the risk free rate - which when I purchased kiwibonds a few weeks back was .75%. Not sure which option you prefer?

@independent observer , you are dealing with human beings , who dont always react rationally, and have different reference points to you and I , and that causes them to take different actions to you or I

So one can understand why some groups are fearful of cash in the bank .

God only knows where they keep it safely as an alternative

Well I know of families who have tens and hundreds of thousands of dollars hidden around their houses and backyards around the country - so yes agree with you.

Just highlighting the fact that getting deposit insurance won't be a free lunch which appears to be what many would think it might be.


Well the banks have had years of super-profits and huge dividends , so Deposit Insurance is something they can afford

Haha I don't think that is the intended plan Boatman as nice as it would be. I understand a margin will be removed from the offered rate to depositors and go towards a pooled insurance policy. So might see 1% or something like that of interest earned gone - for insurance.

Many interest rates are already below 1 percent, so people will essentially be losing money if they keep their money in the bank. Why do depositors have to carry the cost by themselves, why shouldn't borrowers also have to contribute, as it is the depositors money they are borrowing. I can see savers just taking the money out and buying a safe, or just putting into housing. Also if they limit it to just 50 per bank, many people won't have all their savings covered by it due to us have a lack of banks.

Because our economy is based on lending against property, not saving. Banks are fighting to set the lowest lending rate and I'd suggest setting the most competitive deposit rate is secondary (i.e. they make money from making people their debt slaves).

Well concealed behind a set of booby traps is a good start. Nothing like a good set of old gin traps, someone's fingers in a couple of those let's you know something is afoot.


Your cash is a lot safer in your own hands than in the hands of a banking system that has absolutely no deposit insurance in place.

I wonder if banks will be open for normal service at Level 2. By closing most branches throughout the lockdown and having only brief openings at selected outlets the banks have made large cash withdrawals almost impossible.
I guess we might find out tomorrow when details of Level 2 are released.

@ Graham Adams , I would suspect that those immigrant folk who come from countries with lax banking regulations and regularly experience banks collapsing , have already taken their cash out

The RBNZ's own balance sheet analysis conforms $currency in circulation at $7.935 bn as of Mar 20.

Banks' vault cash for the month ending Mar 20 stood at $1.295bn compared to $694mn at end of Feb 20.

Why more cash?

Thought it was easy.
1. No faith in the banks
2. You can still conduct business in Lockdown, without any pesky bank/IRD/govt involvement.

The people that are pulling cash dont have much anyway. If you look at the big picture then debt is the feature. You may be pulling a bit of cash out but thats a waste of time if your in debt. The amount of cash the majority of people have is tiny compared to their debt level. Its your level of debt thats going to bite you in the ass in the coming months and all that cash and more is going to be flowing back into the banks.

Will it flow back though?

Hard to claim your debts if everyone owes you. Plus, as they say "Possession is nine-tenths of the law"

Yes and nobody knows that you still have the cash.

Those who stocked up with cash were the same who stocked up with toilet paper.

Well said!


Bollocks , unless you regard the NZ$ as toilet paper , there is no comparison .

I have lived and worked in Central Africa as a corporate banker for one of the worlds biggest banks in the 1980's and all I can say is I understand migrants not trusting banks

Better off with diamonds - can be easily concealed from prying eyes.

Totally agree. The strong balance sheets of the big 4 banks have positioned them to buffer virus crisis. No way comparable to any Asian or European banks.

If the banks are so strong and there is no risk, why has the government not put in place the deposit guarantee, as it said it was going to do about a year ago?
The governments actions do not match it's rhetoric, - situation normal.

50k is not enough. Even in Oz it is 250k per bank. Our last bank guarantee scheme didn't even have a limit. So makes no sense to me that they limit it. Especially if the cost will be a percentage.

If the banks are so strong and there is no risk, why do we not allow corrections to over inflated financial speculation?

It could be vested interest, but nobody will openly say that.

Or perhaps they were just People who were sensible enough to realise that there will be heavy discounting when stores reopen as owners offload stock (damaged goods) before the liquidators arrive.

The OCR drop along with dismal interest returns on savings accounts also has a part to play.

Why wouldn't you have a stash of cash... just additional diversification

Keep decreasing rates, RBNZ, trying to sustain the housing Ponzi bubble at all costs. And then you will see a veritable run on the banks happening more quickly than you can ever predict.

I have been withdrawing cash on a regular basis from ATMs. Enough to cover a few months expenses while Kiwi Bonds are being liquidated, if need be. I’ve also been thinking about wealth preservation. Don’t laugh but I’m leaning more and more towards property.

Hah.... Sorry. I couldn't help it.
Yep, you can sure sleep easy with Kiwi Bonds.
Lots of compound interest advice letters that come in the mail all the time is a bit tiresome though.
Property. Yep, t'is good if you bought it ages ago and its in a desirable spot for your future self. With a bit of land to keep you occupied vs becoming an unmotivated blob in an apartment.

Fiat money is easy money cause it’s easy to inflate. Gold is hard money cause it’s hard to inflate. Period.

Just set up an account to buy some Bitcoin and upon logging in after identity verification I was met with this message:

“It has come to our attention that Australian banks are often wary of their customers making investments in cryptocurrencies.
Whilst this is an unfortunate and dubious concern, it is a reality, and something that we need to stay abreast of.
As a consequence, we would like to advise all of our customers to never explicitly use the word "Bitcoin" or other cryptocurrency related terms in any transaction description entered on a deposit made from your bank, as this is likely to draw unwanted attention and may result in unexpected bank account closures.”

Independent Reserve in Australia only allow up to $10k transfers from banks into trading accounts now. You cannot transfer into your account from ANZ or BNZ. Independent Reserve would be the most trusted crypto exchange in Australasia.

That's the one I'm using. I have a CommBank account and a BNZ account. If I deposit from my CommBank account am I going to have problems?

Is that CommBank in Australia? Should be fine but possibly only up to $10k at a time. You should be OK. You cannot transfer from BNZ I believe. Also, you cannot use TransferWise.

Yep CommBank Australia. Okay cool, I'm only planning to get a little bit anyway. What's the official explanation for why they're so anti? Is it a money laundering thing?

The Aussie govt doesn't really want people buying crypto. And yes, the reason given is AML I think. Don't understand why there is a problem with BNZ and ANZ in NZ. No issues with ASB.

Payments and the concept of legal tender

" For very large sums, therefore, the
courts would most likely conclude that payment in legal tender has been
implicitly excluded unless specifically agreed to. This is on the basis that
payment by bank transfer is the almost universal method of settlement
and parties would be assumed to have agreed to it, without necessarily
stating it, and at the same time excluded other methods such as payment
in banknotes."

So 3 out of 5 banks saw an increase in cash withdrawals, but the other 2 say they didn't?? Sounds like spin to me.

I am fairly certain all our banks are safe for now, but my bank telling me twice I can't make an over the counter cash withdrawal over $1000 "for the foreseeable future across all alert levels" makes me wonder whats going on. I am hoping its just a couple of junior helpdesk staff that have got the wrong info. I will rock up to the branch in level 2 and see what happens.

Exactly, the responses have been run through the spin, legal and management depts. Not answering the questions directly etc. And because of that, pretty much worthless.

Beanie, local ASB has allowed up to 2k from ATMs although haven't checked for 2 weeks now.

I have had a proper read of the RBNZ material and I now wonder if they have been caught with their pants down and are running out of banknotes.

They use words like "very significant uplift in currency in circulation" and "unprecedented demand for cash leading up to the lockdown", and combined with the words used by the banks in their replies in the article above, and my own experience of being told there is no cash available for the foreseeable future it all fits.

An extra billion dollars suddenly much do the RBNZ keep on hand in the vault? Its not like they can get some more printed up (in Canada?) and delivered in a few weeks in the middle of a pandemic.

The RBNZ "expect to get a large portion of the cash back once the pandemic is over". I guess that depends if people feel its safer back in the bank. A government guarantee would do that.
Be interesting if a lot of cash stays out there, the IRD won't be thrilled if it eventually comes from under the mattress and into the black economy.

A lot of this cash hasn't made it's way directly from the atm to the mattress. Last year noticed a lot of the food hall shops at Albany ran an open till. Corner stores probably the same, then theres cash jobs and drugs, its NZ after all.

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