A British security printing and papermaking company, De La Rue, has said that there has been a significant decrease in global demand for banknotes, the lowest in the last 20 years.
De La Rue who is responsible for designing one-third of the world’s banknotes and operational in 140 counties has observed a decline in cash demand ever since the Covid-19 pandemic.
This was around the time when Central banks increased their currency reserves.
As a result, the company anticipates a decline in its annual profits, which may fall short of expectations, according to BBC.
Due to the difficult trading environment, the company is forced to renegotiate its loan agreements with its banks.
De La Rue said in a trading update, “The demand for banknotes has been at the lowest levels for over 20 years, resulting in a low order book going into fiscal year 2024,”
The head of the company, Clive Vacher, told the BBC that “central banks had stepped up orders for bank notes during Covid as they always did in economic crises. But they were now delaying new orders as they ran through their stock.”
In his words, “They always do that when there are crises, because of the security that having cash around them has.
“So we expected a downturn, which has indeed happened, but that downturn is probably extending deeper and probably for an extra 9-12 months than we’d normally expect in the normal cycle of things,” he said.
The use of cash by consumers has reduced in several countries due to the increasing prevalence of online or card transactions, particularly contactless payments.
Although De La Rue has observed some indications of improvement, it remains uncertain about the time frame for recovery.
The company’s trading update resulted in a decrease in its shares by as much as 30% on Wednesday, although it recovered some of the losses.
De La Rue is a British security printing and papermaking company founded in 1821. The company has operations in over 140 countries around the world.
