The surge of paper dollars is a sign of hoarding, not of increased payments. In the US, the share of paper dollars for payments has been declining for years, replaced by electronic payment methods, such as credit and debit cards, PayPal, Zelle and similar systems, all kinds of smartphone-based payment systems, the automated clearinghouse (ACH) system, and checks every now and then.
The government, they say, has already exhausted most of its financial buffers during this year’s virus crisis. Yet it needs to find more money to maintain its social welfare programs and continue supporting struggling state-owned oil giant Pemex. And the last thing it wants to do is to significantly increase Mexico’s public debt load, which would make the economy more vulnerable to macroeconomic risks. Hence the move by the government on Banxico’s reserves.Paper Dollars in Circulation Globally Spike amid Hot Demand. But a Mexican Bank, after Run-ins with the US, Can No Longer Unload its Hoard of Paper Dollars | Wolf Street