The Need for a New Cash Calculation

David Fagleman, of the consultancy Enryo, has recently presented and written about cash in circulation (CIC). He makes the case that CIC data provided by central banks is unhelpful because it overstates the case for cash usage and creates confusion about what is actually happening.

CIC includes cash used for transactions, cash held in the cash cycle for use in bank branches and ATMs, cash held overseas, cash that has been legitimately hoarded as a store of value and cash held in the shadow economy. It includes old series banknotes that have not yet been redeemed for the latest series and high denomination banknotes that seldom circulate. As a result, not all of the CIC is actually useful or usable.