Hoarding at the start of the pandemic didn’t stop with toilet paper and hand sanitizer—people also stockpiled $50 dollar bills.
The Bank of Canada confirmed to BNN Bloomberg this week that there is a shortage of $50 bills at some Canadian bank branches due to the run on the bank notes.
Spokesperson Amélie Ferron-Craig said in an email to BNN Bloomberg that the shortage is “temporary,” however, and new notes will be produced as part of “regular stock replenishment” which is expected by the end of summer.
A recent Bank of Canada staff discussion paper analyzed the impact of the pandemic on the demand for and use of cash, noting a concern that the supply of bank notes could be affected.
“In early March 2020, the Bank became concerned that the bank note supply channel could become compromised during the pandemic,” it reads. “Accordingly, the Bank increased its own note reserves across the Bank Note Distribution System (BNDS) to ensure that any increase in demand for cash by financial institutions across Canada could be met.”
BNDS has 10 regional centres providing cash to financial institutions across the country.
The paper also shows that in early March, the Bank of Canada filled its BNDS note inventory from less than 60 percent capacity to more than 90 percent, but that dropped to less than 70 percent capacity by late April.
The paper says field reports collected from BNDS participants by bank staff indicates two main reasons that have led to an increase in notes in circulation (NIC) recently:
- Financial institutes are taking precautions to increase their cash inventories during the pandemic, with concerns of possible disruptions to cash transportation services, and to reduce the risk of cash stockouts from potential customer demand.
- The flow of cash deposits from retailers to financial institutions was disrupted during the pandemic lockdown restrictions. Otherwise this would typically help replenish institutions’ note inventories. As a result, financial institutions compensated for this shortfall by drawing cash from the Bank of Canada.
According to the Bank of Canada’s 2020 Cash Alternative Survey, only 7 percent of Canadians said they had trouble accessing cash during the pandemic, with withdrawals taking place mainly in the major cities. Most respondents reported using cash less frequently, and 12 percent said retailers refused to take cash due to safety concerns.