Coronavirus/banknote germs: dirty money
Beijing is ordering banks to remove potentially contaminated cash from circulation and sterilise them
Money laundering has a new twist in China’s battle with coronavirus. Banks are being ordered to remove potentially contaminated notes from circulation. Only after sterilisation can they return to general circulation. The outbreak will further fuel China’s embrace of digital payments.
The survival time of the virus on inanimate objects like banknotes is thought to be measured in mere hours but authorities are taking no chances. Chinese citizens are already less reliant on cash. Mobile payments are ubiquitous in Chinese cities. One study suggests 98 per cent of residents use them.
Measuring the speed at which banknotes change hands is difficult. The best proxy is how long it takes for a note to wear out. Smaller denominations wear out faster due to more frequent use. A $1 or $5 bill has a relatively short lifespan of 1.5 years. They are estimated to change hands on average about twice a week. For a $20 bill, the measure is a third lower. It gets progressively smaller for larger denominations.
Fear of cash as a vector for disease is as old as money itself. In ordinary circumstances, modern notes carry similar quantities of bacteria to those found on a door handle. It is harder for germs to adhere to newer polymer notes.
While cash is shrinking as a share of overall payments globally, it is still popular for smaller purchases in places like the US. It accounts for half of all transactions under $10 in 2018, say the Federal Reserve.
Chinese authorities are right to be cautious. Notes travel long distances. Website Where’s George? tracks individual US banknotes. A dollar bill first tagged in 2008 has travelled at least 15,000 miles or 3 miles a day on average, including a trip to Mexico.
Money makes the world go around. Cash also goes around the world. That quality will hasten its decline in China.