Spending over the holiday season wasn’t as robust as anticipated, based on data coming out of the Bank of Jamaica (BOJ).

The BOJ has reported that growth in currency stock for December 2019 fell below its projected target, reflecting a decline in currency issued —the lowest growth in a December month within the last 10 years.

During the last five working days of December 2019 (December 23-31), data from the BOJ shows that net currency for the period to financial institutions (commercial banks, building societies and cambios) grew by $2.94 billion. There is normally a stronger demand for currency during the month of December, associated with increased spending over the holiday period. As such, financial institutions would request more currency from BOJ to satisfy this demand. In spite of the $2.94-billion growth in money circulated for the last five days of December, this was below the bank’s projection for the period of $7.37 billion as well as below the average growth of $4.58 billion over the past five years.

“The issue for the week contributed to an overall growth of $18.9 billion or 14.5 per cent in the currency stock for December 2019, below the bank’s projection for growth of $22.4 billion or 17.2 per cent. The growth in issue for the month also fell below that for December 2018 (21.4 per cent), and was the lowest growth in a December month over the past decade,” the release said.

The bank reported that as at December 31, 2019 the currency stock was $148.9 billion, representing an annual increase of 11.5 per cent relative to annual growth of 20.4 per cent at the end of December 2018.

Last December the bank had expressed that they were projecting a 17.2 per cent or $22.4-billion increase in currency issued for the December period. This they said was largely due to the fact that there would be a stronger need for cash in public circulation during the busy Christmas period when Jamaicans are expected to spend more.

The bank has however said that in light of this decline in the growth of currency stock for the normally busy Christmas period, they are expecting that the majority of the currency issued will be redeemed this month.

“The bank is anticipating that the majority of the currency issued during December 2019 will be redeemed during January 2020. For the last five years, net currency redemption in January averaged 73.2 per cent of the net currency issued in the preceding month,” the release also stated.

ELECTRONIC AND INTERNET TRANSACTIONS ON THE RISE

As a rationale for the decline in the growth of currency stock, the BOJ have since expressed in another update that while coins and notes remain the dominant means of settling transactions there has been a steady rise in the use of electronic payments and Internet-based transactions (online shopping).

“While notes and coins, and in particular the $1000 note, remain the dominant means of settling retail transactions in Jamaica, the bank has noted the steady rise in the use of electronic means of payment by bank account holders (point of sale debit and credit card transactions), as well as Internet-based credit card transactions,” the central bank said.

Pointing to the reports of the annual average growth in the use of electronic payments now estimated at some 24 per cent, the BOJ has said that electronic payments for December within the past five years (2014-2018), has been higher than the average growth in currency by about 14 per cent.

“This trend will likely continue in line with the efforts to broaden the participation of more unbanked Jamaicans in the financial system,” they further expressed.