Cash is a contingency and fall-back solution

The exceptional growth of the volume of banknotes in circulation in 2020 illustrate global trust in banknotes. The shift of demand towards middle and high-denomination notes demonstrates the importance of the store of value function of cash, particularly in times of uncertainty.

As the Taliban resume their rule, Afghanistan runs out of cash and hard currency. U.S. dollar and afghani shipments have ceased, its international assets are frozen, and international aid has halted.

As U.S. and European troops departed, foreign currency shipments to Afghanistan stopped. As a result, Afghans face an acute cash shortage in the early weeks of the second Taliban regime.

Cash in circulation increased in the euro area during the first year of the Covid-19 pandemic. An increase in the precautionary demand for cash more than compensated the decline in its transactional demand. Fears over the role of cash in Covid-19 transmission weighed down on its use in payments.

Riots resulted in the destruction of bank branches and ATMs and the suspension of banking and cash management operations in South Africa. However, industry stakeholders secured business continuity in the provision and circulation of cash.

The bi-partisan bill would prohibit businesses and retailers from refusing to accept cash from consumers for in-person, brick-and-mortar retail purchases.

Available statistics show that most countries around the world experienced a run for cash in 2020 due to the Covid-19 pandemic.

During the Covid-19 pandemic, Mexicans did not switch en masse to CoDi, the central bank’s mobile payments platform launched in 2019. Cash continues to dominate retail payments.

Myanmar (Burma) is facing a severe cash shortage as the central bank is not providing sufficient cash to meet demand. Queues are growing at ATMs and bank branches, raising fears of a banking crisis.

As global payments revenues exceed $2 trillion or 2.2% of the world's GDP, a growing number of stakeholders are vying to capture market share. Can cash compete in the new space race?

An increasing number of central banks are intensifying research on central bank digital currencies (CBDC). Theoretical papers assume that CBDC should emulate the features of cash and that the former would complement rather than substitute the latter. But is this feasible?

The latest Federal Reserve Diary of Consumer Payment Choice shows that in 2020, consumers made fewer payments and in particular less in-person payments. Consumers of all age and income groups have significantly increased their precautionary holdings of cash.