Cash is alive and kicking

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If, as many predict, the days of cash are numbered, nobody has told the companies that make the stuff. This month, the UK’s De La Rue, the biggest private maker of bank notes by volume, raised its trading outlook. During the past 12 months, its shares have risen 32 per cent.

Its German rival, Giesecke & Devrient, is also enjoying buoyant growth in its printing division and shares in Zurich-based Orell Füssli are up 30 per cent so far this year

There are good reasons for this. As more central banks outsource their currency production, they have only a handful of printers to choose from. A strong global economy has been helpful. Demand is also boosted when governments upgrade the notes in circulation or enter a currency bloc. In poorer countries, the growing popularity of cash machines, requiring nice clean bills, and a healthy rotation of heads of state, is good for business. Regime change in Iraq, for example, resulted in a big order for new bills.

Sales to emerging countries, which will be cash-based for years, should easily compensate for the shift to plastic elsewhere.

And even the use of cash in the west is showing remarkable resilience. Cards have certainly won the war, in terms of total value of spending – this Christmas in the UK debit card purchases exceeded cash buying for the first time. But by volume, about two-thirds of all transactions across Europe are made using cash.

Notes and coins are still preferred for small purchases. In the US, almost 80 per cent of shoppers use plastic for items costing more than $100. This drops to just 45 per cent for items under $10, which account for three-quarters of all transactions. So far, assaults on this last bastion of cash have had mixed results.

Until a killer technology emerges, currency makers are improving margins by including more sophisticated security features, such as holographic weaves and plastic windows, in their notes. With rising wealth, more countries will pay for these things. For now, at least, it is a good time to be making money.

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