[Graphic News] The old hold onto more cash

An average Korean household holds 300,000 won ($255) in cash, a Bank of Korea survey shows.

Those with heads of households who are older tend to hold larger amounts of cash for both payment and emergency uses.

Households headed by those in their 50s keep 400,000 won -- the largest amount of cash -- at home.

When it comes to the ratio of cash holdings to monthly income, households headed by seniors aged 60 or older keep 16.4 percent of their earnings in cash, the highest proportion across age groups.

In the report released on Thursday, the BOK said this finding has implications for future cash demand in Korea, where the population is aging rapidly.

BOK found that household cash holdings for emergency uses, not as a payment instrument, are more than 80 percent in 50,000-won denominations, which could be a reason for the banknote’s low collection rate.

A quarter of the surveyed households also said they plan to increase their cash holdings when interest rates drop, which could potentially complicate the central bank’s interest rate decisions.

The BOK is keeping the key rate at an all-time low for the ninth month running, after cutting it by a full percentage point between August 2014 and June last year, as part of efforts to spur private spending and investment.

The survey was conducted on 1,100 heads of households and 1,100 small and medium-sized enterprises between mid-October and mid-November last year.
(Graphic: Nam Kyung-don)