Sri Lanka witnessed a record 14.5% year-on-year increase in physical cash circulation in 2024, with total currency in circulation rising to Rs.1.36 trillion by the end of the fourth quarter, according to the Central Bank.

This marked a notable jump from Rs.1.19 trillion in 2023, reflecting the public’s continued reliance on cash despite the growing presence of digital payment systems.

Contrary to typical seasonal trends, cash circulation did not peak during the Sinhala and Tamil New Year in the second quarter, instead continuing to rise into the third and fourth quarters, reaching Rs.1.23 trillion and above.

Of the total cash in circulation, Rs.1.05 trillion—or 77.4%—was held by the public, a higher proportion than the 71–76% range seen in recent years, while banks held Rs.307.7 billion.

Economists warn that this high level of cash held outside the banking system restricts the ability of banks to extend credit, thereby limiting potential economic growth.

Despite advancements in digital finance, cash remains entrenched in Sri Lankan society due to cultural habits, limited rural digital infrastructure, security concerns, and the informal sector’s dependence on physical money.

Smaller denominations such as Rs.20, Rs.50, and Rs.100 notes were widely used for everyday transactions, while the Rs.5000 note accounted for 78.5% of the total currency value in circulation.