Tag: cash

Parental guidance: the influence of parents on young people and their attitudes towards cash

Lily Smith

Like mother, like daughter? Like father, like son? Despite the increasing prevalence of digital payments in today’s world, young people continue to use cash. The persistence of cash use, even among youngsters who have grown up with debit cards and smartphones, raises interesting questions about the factors that influence young people’s payment choices. Are they really rebelling against their parents or are they more like them than they care to admit? It seems that young people are following in their parent’s footsteps and choosing to use cash because their parents do so. And instead of rolling their eyes at their advice, young people are in fact turning to them for hints and tips on money management.

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Cash stuffing versus girl maths: how do people budget in a digital world?

Zahra Damji and Eleanor Hammerton

The best purchases in life are free. How’s that possible, you ask? Well, pay with cash of course! The idea that anything bought with cash is free because the money is spent when you make the withdrawal, not when you make the purchase, is one example of the TikTok phenomenon #girlmath. This belief, which is not gender or age specific, contradicts headlines that suggest people are switching to cash to help them with budgeting. We draw on an online survey of UK adults conducted by the Bank of England in 2023 to explore how people budget in an increasingly digital world. We find that, rather than turning to cash, contactless is king when it comes to budgeting.

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Covid-19 Briefing: Corporate Balance Sheets

Neeltje van Horen

Faced with unprecedented declines in corporate revenue, the Covid-19 shock represents a loss of cash flow of indeterminate duration for many firms. It is too early to tell how exactly firms will be affected by this crisis and how scarring it will be, but the crisis will likely have a significant impact on most corporates. This post reviews the literature on factors affecting firms’ ability to withstand the Covid-19 shock and what large corporates did to shore up their finances.

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Eliminating high denomination notes and making the mob miserable

Ronnie Driver

Economists usually talk about money serving three functions – a medium of exchange, a store of value, and a unit of account.  But the ability to make payments using commercial bank deposits, which account for the vast majority of money, has already divorced the physicality of notes from the concept of the medium of exchange. Inflation and non-remuneration renders physical money a poor store of value.  And the unit of account does not rely on physical cash.  So is there a specific role for physical paper money anymore?

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Are firms ever going to empty their war chests?

Katie Farrant and Magda Rutkowska

UK private non-financial corporations (PNFCs) consistently ran a financial surplus between 2002 and 2013. They now hold around £1.8 trillion of financial assets, including £0.5 trillion of cash. This has attracted attention from policymakers and the media. Should we expect companies to spend these assets to finance investment? The MPC considers this to be possible (see e.g. the February 2015 Inflation Report). Many agree, calling on companies to spend their ‘cash hoards’ (see e.g. these articles in the Telegraph and the FT). Here, we explain why we think companies are unlikely to run down their assets significantly. This does not mean that they will not invest; rather, they will not necessarily finance investment through liquidating assets.

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