Despite the push for a cashless society, Australians are embracing the security of physical money, with the Reserve Bank of Australia (RBA) revealing a surprising surge in demand for banknotes.

In a stark contrast to the global shift away from cash transactions, the RBA disclosed recently that the total value of banknotes in Australia skyrocketed by 22 per cent, reaching a record high of $19 billion from March 2020 to December 2022.

This revelation challenges predictions of Australia becoming "functionally cashless" by 2025, raising concerns among economists and the public about the diminishing control over financial assets.

While the overall demand for cash has slightly decreased from the peak, it remains close to historical highs, indicating a significant shift in how Australians perceive and use physical currency.

The RBA suggests that rather than spending, Aussies are hoarding banknotes, likely for wealth storage or precautionary savings.

Analysing the data further, the RBA found that lower denomination banknotes, used for in-person transactions, experienced slow growth, while higher denominations, especially $50s and $100s, witnessed a substantial increase.

The surge in high-value banknotes aligns with the community's growing desire to hold cash as a precaution during economic uncertainties.

Estimates from various data sources indicate that a staggering 55 to 80 per cent of banknotes in circulation are hoarded, amounting to a value between $55 billion and $81 billion.

This surprising trend challenges the narrative of a cashless future and underscores the enduring appeal of physical money for Australians.