It is known by many that Japan is a country which is very technically advanced.
Cashless payments are commonly used in daily transactions and it would appear that Japan could be the ideal “Cashless Society”. Except it’s not.
Total currency in circulation at the end of 2013 rose to Y90 trillion (US$860 billion) in Japan, an increase of 17% during the past 10 years. Most notably, this is the highest rise of any major industrialised country when compared with the economy size.
Banknote demand has particularly increased since 2010, which has left the Central Bank and economists somewhat baffled. The cash is not being used for transactions, but is instead thought to be hoarded at home. The amount of cash in circulation in Japan is estimated to be in excess of US$6,000 per person, far higher than in the US where it is $2,030 per person.
Since the global financial crisis in 2008, the demand for Y10,000 banknotes has increased by 10%, whereas the demand for Y1,000 banknotes has remained constant. This suggests that people are storing their savings, using higher value banknotes, at home.
An economic program launched by the government a year ago is thought to be helping Japan to end its period of deflation. Prices have started to rise and it is hoped that people will use their hoarded cash for purchases before costs rise further.
Source: The Wall Street Journal