Three key trends emerge:

• CashMoney in physical form such as banknotes and coins. More is essential in times of crisis: the Russian invasion of Ukraine, the humanitarian disaster in Afghanistan, and the increasing number of extreme weather events around the globe have all demonstrated the importance of developing a resilient cash cycleRepresents the various stages of the lifecycle of cash, from issuance by the central bank, circulation in the economy, to destruction by the central bank. More.
• The paradox of cash is worsening: demand for cash is driven mainly by precautionary motives, while transactional demand is declining in many countries. This raises the issues of maintaining and funding the cash infrastructure and the role of the cash infrastructure as a public good.
• More countries focus on ensuring access to cash: a growing group of nations is responding to the challenges of a shrinking infrastructure and declining usage. They are adopting guidelines and regulations to ensure future cash access and acceptance.

January: The Afghani Cash Shortage and Humanitarian Catastrophe

Afghanistan direly needs physical cash to jumpstart its imploding economy. Four months after the Taliban took over Kabul, the Afghan banking system is on the brink of collapse. The U.S. administration froze Afghan reserves abroad and suspended air shipments of U.S. dollars to Da Afghanistan Bank (DAB), the country’s central bank, paralysing the banking system.

Afghanistan’s cash shortage resembles similar crunches in countries such as Zimbabwe, Venezuela, Lebanon, Syria, and Myanmar, experiencing political and economic dislocation, social instability, and humanitarian crises.

In October, Afghani media announced the arrival of new banknotes from overseas to replace damaged notes and address the liquidityDescribes the extent to which assets or rights can be converted into cash without causing a significant decrease in the asset’s price. Accordingly, liquidity is often inversely proportional to the profitability of the asset and involves the trade-off between the selling price and the time needed to convert it to cash. In finance, cash is considered the most liquid asset and cash is sometimes used as a synonym for liquidity (e.g. cash reserves; cash pooling…). More crisis.

February: Facebook’s Diem Crashes to Earth

The Facebook-led Diem Association sold its assets, putting an end to the social media’s controversial ambitions in digital moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More and payments and a three-and-a-half-year battle with regulators and central banks across the globe.

Facebook announced its plan to launch Libra, later renamed Diem, in 2019, a stablecoin built on a tailored version of blockchainAn unchangeable digital record where transactions are processed and verified by a network of independent computers rather than by a single referee. This decentralised structure has been described as an open distributed ledger. It supposedly enhances security as there is no single entity to be hacked. It also protects personal identity and guarantees that governments can’t block transactions or otherwise manipulate the payments space. The blockchain is the underlying technology supporting most ... More technology designed to let people shop and make low-fee money transfers globally. The new currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More was initially tipped to launch in the first half of 2020. Libra aimed to be the first global peer-to-peer payments network. It claimed it would serve the 1.7 billion people without access to traditional banking.

March: The Russian Invasion and Cash in Ukraine

Demand for cash spiked during the Russian invasion of Ukraine. The National Bank of Ukraine (NBU) moved to secure the cash supply and encouraged civilians to make cashless payments.

On February 25, the NBU said that “banks to the extent possible replenish ATMs with cash. The NBU, in its turn, is supplying banks with cash and liquidity.” “Banks shall continue to operate […] ATMs shall be supplied with cash without any restrictions, [… and] the NBU shall provide unlimited cash support,” said the NBU in a martial law resolution.

April: Dutch Stakeholders Sign Covenant to Ensure Proper Functioning of Cash

Twenty-three Dutch organisations involved in the payments system signed a new Covenant to ensure that cash continues to function correctly as a payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More in the face of a steady increase in electronic payments.

The covenant sets out agreements among the parties to safeguard the permanent availability and accessibility of cash. They cover various topics such as the number of ATMs, fallback options for electronic payments, an inclusive payment system, and anti-money laundering measures. Banks have agreed to keep fees for cash services unchanged until mid-2023.

June: Spain Passes Law Requiring Retailers to Accept Cash

The Royal Decree 24/2021, or General Law for the Protection of Consumers and Users, making it mandatory for retailers to accept cash, entered into force on May 28. Refusing a payment in cash is considered a violation of the law.

The refusal of a paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More in cash is considered a minor offence. Still, it can become severe under certain conditions, for instance, if a retailer takes advantage of the demand for specific products or services or repeatedly refuses cash payments, causing painful, unjust, and unforeseeable social disturbances.

July: A Global Update on Cash Demand in Turbulent Times

Following exceptional growth in 2020, cash demand returned to normal in 2021. It is remarkable that even after such a fantastic year, the median annual growth rate of the value of banknotes in circulation did not fall close to zero or even reach a negative figure but kept the level it had before the pandemic. Global data for 2022 is not available at the time of writing. Still, one can anticipate that the rapidly rising interest rates increase the opportunity cost of holding cash, while geopolitical tensions increase the precautionary motive to keep the money.

Seemingly independently from the growing precautionary demand for banknotes, the long-term trend of the share of cash in transactions is generally decreasing. This divergence in using cash for payments and saving purposes, respectively, might not be an issue if cash were still the dominant means of payment in a given country or region. However, when cash is on the way to becoming a marginal payment instrument, this raises the question of the maintenance of the cash infrastructure and the role of public money.

August: Cash and the Cost-of-Living Crisis in the U.K.

As the cost-of-living crisis deepens due to economic stagnation and rampant inflation, more people turn to cash to manage their budgets, driving up withdrawals and deposits. “People will be taking out cash and physically putting it into pots, saying, ‘This is what I have for bills, this is what I have for food, and this is what’s left,” said Natalie Ceeney, chair of the Cash Action Group. #CashStuffing has become a hot trend on TikTok and Instagram among Gen Z, with over 700 million views.

Paradoxically, the downsizing of the U.K. cash infrastructure has driven customers to turn to the Post Office to access cash. Many retailers who avoided cash during the pandemic have returned to accepting cash payments.

September: CashEssentials presents the first CashTech Innovation Awards

The CashTechThe expression was first coined by CashEssentials and is the encounter of cash and technology. It brings together innovative companies who leverage software and modern communications technology to improve cash services: access to cash; acceptance of cash; and the efficiency of the cash cycle for all stakeholders. More Innovation Awards celebrate the tremendous advances in harnessing digital technology to ensure an accessible, reliable, and sustainable future for cash.

The winners were:

• DBS Bank (Singapore) for its pop-up ATMs, Bank-in-a-Box banknoteA banknote (or ‘bill’ as it is often referred to in the US) is a type of negotiable promissory note, issued by a bank or other licensed authority, payable to the bearer on demand. More, and coinA coin is a small, flat, round piece of metal alloy (or combination of metals) used primarily as legal tender. Issued by government, they are standardised in weight and composition and are produced at ‘mints’. More deposit terminals.
• Koenig & Bauer Banknote Solutions for ValiCash™, the first application to authenticate banknotes via mobile phone, bridging the physical and digital worlds.
• Sonect (Switzerland) for its virtual ATM network connecting consumers who want to withdraw cash with merchants who wish to deposit it.
• Clip Money (U.S. and Canada) for its app-based end-to-end cash deposit solution for businesses, regardless of their bank.

October: The Austrian Central Bank launches the Euro Cash 360° Platform to Promote Cash

The Central Bank launched the EuroThe name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. More Cash 360° Platform, along with the Austrian MintAn industrial facility manufacturing coins. More, social partners, and other interest groups, to strengthen and safeguard the role of cash by facilitating open dialogue. The platform openly promotes cash in stark contrast to the traditional neutrality of most central banks.

In parallel, over half a million Austrians have signed a petition calling for a referendum on the constitutional enshrining of the right to unlimited cash payments. Petitions which receive over 100,000 signatures require a debate in Parliament.

November: The Irish Government Proposes to Protect Access to Cash

A Department of Finance report highlights the increasing pressure on the cash infrastructure due to the closing of bank branches and ATMs. It recommends a legislative framework to ensure reasonable access to cash. The initial objective will be to preserve access at December 2022 levels.

Ireland joins a growing group of countries that have issued guiding principles or regulations for access to cash, including the UK, Canada, the Netherlands, Lithuania, Sweden, and Finland.

December: The Social Role of Money in an Age of Digitalisation

The Axa Research Fund published an in-depth analysis of societal resilience. The publication highlights that three decades of economic growth and technological innovation have contributed to reducing extreme poverty and increasing literacy. This has, however, been achieved to the detriment of the environment and has come with growing social and economic inequality.

In particular, the digitalisation of money comes with a high social cost despite undeniable gains in convenience and efficiency. It negatively impacts social cohesion and financial inclusionA process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More. With digitalisation, the monetary system becomes more a private good than a public one – and one that risks leaving the most vulnerable behind.

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