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September 25, 2020
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During the pandemic there was a “gray market fashion” Blocksats

Once again, it turned out that the introduction of certain bans by the authorities brings side effects that politicians probably did not expect. The circulation of cash in our country has increased by over PLN 62 billion over the last year. It’s almost 23 percent. The gray area has also increased. This is a lockdown effect.

Gray area

Since such an increase was noted by the National Bank of Poland in April, which was the month of lockdown, when access to banks was limited, and the last interest rate cut took place only at the end of April, one should take into account a further increase in cash in circulation in the following months – he explains in the pages Business Insider economist Marcin Mrowiec. – On the one hand this may be conducive to the shadow economy, and on the other hand it will be an additional factor of pressure on banks. To attract deposits, they will have to pay “above WIBOR”, which will also hit the interest margin – he adds.

Piotr Bielski, an economist at Santander Bank, looks similarly. – Many people have decided that safer to have some cash at home “in reserve”, in a situation where it is completely unknown what’s next with the economy, markets, how long we stay locked up in homes. But for me the most surprising is that the trial was continued in April. In other segments of the financial market there was already clear calming down and stabilization of Poles’ financial decisions – e.g. the redemption of TFI units ceased, interest in foreign currencies decreased.

Genesis of the phenomenon

So we know that the increase in cash in circulation can be due to several factors. What we can observe now, however, is an interesting phenomenon. As you can see, in times of crisis people stop including trust banks. This is probably the reason for mass withdrawals from ATMs. In addition, we can assume that many citizens did not comply with power bans and secretly used, for example, in hairdressing services.

If in the future banknotes and coins are withdrawn from circulation, people will start looking for other means of payment that give them freedom in the form of independence from politicians. Cryptocurrencies, such as BTC, may of course be the ideal solution.

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