Key Facts
• July 3, 2024, marks one year since new banknotes were issued.
• Cash circulation in May 2024 dropped 1.8% year-on-year, marking 19 consecutive months of decline.
• Over 2.2 trillion yen in cash was withdrawn from circulation in the past year.
• Banknotes decreased by 1.8%, while coins fell by 1.4% year-on-year.
• 10,000-yen notes saw a 2.3% drop in May 2024, continuing a 17-month decline.
• 5,000-yen and 1,000-yen notes increased by 5.5% and 4.0%, respectively, due to demand for new notes.
• Three main factors driving the decline: cashless payment adoption, high inflation, and coin deposit fees.
• Japan’s cashless payment ratio surpassed 42.8% in 2024.
• Inflation reduced the real value of a 10,000-yen note to 8,502 yen (compared to 2000).
• Coin deposit fees introduced in 2022 led to a sharp drop in 500-yen coin circulation.
• Cash retains advantages: low risk of failure, no technical barriers, spending control, anonymity, and suitability for gifts.
• Cash is expected to persist in limited use cases despite declining demand.
Summary
Despite the issuance of new banknotes in July 2023, Japan continues to experience a significant decline in cash usage. Cash circulation dropped by 1.8% year-on-year in May 2024, with over 2.2 trillion yen withdrawn from circulation. Key factors include the rise of cashless payments, persistent inflation, and the introduction of coin deposit fees. While cashless payments now account for 42.8% of transactions, cash retains unique advantages such as reliability during power outages, no technical or economic barriers, and suitability for traditional practices like gifting. The real value of cash has also diminished due to inflation, with a 10,000-yen note now worth 8,502 yen compared to 2000. Coins, particularly 500-yen coins, have seen sharp declines due to deposit fees. Although cash usage is expected to decline further, it will likely remain in limited use cases, supported by its inherent strengths. Future innovations in payment systems could challenge cash’s existence, but such developments are unlikely in the foreseeable future.
