Cash Surges 36% in Ukraine Border Countries as War Begins
The first month of the war in Ukraine saw a significant 36% increase in average daily net cash issuance in bordering countries. This surge highlights the enduring importance of cash, even in the digital age.
Cash's unique attributes make it a crucial resource during crises. It's tangible, resilient, offline, and widely accepted. This has been evident throughout various crises: the 2008 financial crisis, the 2014-15 Greek crisis, the COVID-19 pandemic, and now the Ukraine conflict. During each, cash demand spiked immediately and extremely.
European and national authorities acknowledge cash's role as a store of value and a safe-haven asset. They recommend maintaining cash reserves, ensuring access to cash strengthens confidence in the monetary system. However, no explicit recommendation for emergency cash stockpiles in crises was found from major European or national authorities.
Cash and digital payments reinforce each other, with cash serving as a complement to digital systems. It's the only universally accessible means of payment, requiring no technological infrastructure. The ECB's study on cash demand surges during major crises underscores its importance.
Cash's value and demand have grown significantly over the past two decades, proving its resilience and relevance. As crises continue to emerge, so does the need for cash. While authorities don't explicitly recommend emergency cash reserves, the public's instinct to hoard cash during uncertainty speaks volumes about its importance.
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