Cash is a contingency and fall-back solution

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.

Deutsche Bank Research forecasts that not only will cash be around for a long time but the digitalisation of payments has the potential to rebalance global economic power.

A new ECB report concludes that the exceptional demand for banknotes during the pandemic is driven by an increase in precautionary holdings in times of uncertainty as well as by international demand, a phenomenon known as the cash paradox.

Political exploitation, discrimination, financial exclusion and post-disaster resilience were some of the key concerns explored in a thought leadership webinar held on 18th March to discuss the implications for society of shifting to a cashless economy.

Sweden, once the poster child of a society without cash, is increasing the number of cash centres and ATMs to ensure access to cash for all.

We have succumbed to the inevitability of digitalisation and the associated monetisation of money, the cynical conversion of the public good called cash into its privatised digital equivalent. In the process, we are losing the social utility of cash.

Cash demonstrated its resilience in the aftermath of snowstorm Uri in Texas, amid widespread power outages, electronic payments failure, and the shutdown of financial infrastructure.

Payment preference is a luxury that half the world’s population can’t afford. For those who can, preferences often reflect individual benefits rather than social good.