Where's New Zealand's cash hiding?

Reserve Bank data shows there was $5.53 billion of notes in circulation last year, up from just under $5.5b the year before and $4.96b in 2015. Only the number of $100 notes in circulation is dropping.

The amount of physical money in circulation works out to a bit over $1200 in cash per person.

There are no nationwide statistics kept on the volume of cash payments in New Zealand, but banks routinely flag the exponential growth of digital payment channels and dwindling use of cash.

Statistics NZ data shows there were 161 million electronic card transactions in December last year, up from 153m in December 2016. In 2016, there were 232 debit card transactions per person over the year, compared to 103 on credit cards. Credit card use was up 15 per cent year-on-year.

Banking commentator Claire Matthews, from Massey University, said it seemed illogical that the amount of cash circulating continued to grow.

"But it's a fact that it is. While I agree we should have reached 'peak cash', I don't see the evidence that we have."

Her colleague, David Tripe, said it was not unique to New Zealand. There would be a criminal element using cash, he said, and as physical money became worth comparatively less, there was less incentive for people to find lost money "down the back of the chair".

People avoiding tax might work in cash, including tradespeople in the booming construction market.

Some money would be destroyed, he said, put through the washing machine or caught up in a bonfire. "Tourists hold a bit. It's an ongoing trend."

New Zealand Bankers' Association chief executive Karen Scott-Howman described it as a "cash conundrum". She said it was not clear what was causing it.

"It may be that since events like the Canterbury earthquakes more people are holding cash in case of emergencies. They may be keeping it on hand, but not using it for everyday transactions."

In 2015, the Reserve Bank said only 30 per cent of retail spending was done with cash and retailers reported that it was mostly the preserve of low-value purchases.

Cheque use continues to drop - from 18 per person per year in 2010 to 6.5 in 2016. PaymentsNZ is due to release 2017 data next month. (Via The Herald)