Cash is a contingency and fall-back solution

Several Colombian banks experienced system outages in December, generating customer malaise and evidencing the vulnerability of digital payment infrastructures.

A massive winter storm caused widespread power outages across the United States. Cash demonstrated its resilience during the blizzard in the worst-affected Buffalo area.

The Department of Finance Retail Banking Review highlights the increasing pressure on the cash infrastructure due to closing of bank branches and ATMs. It recommends a legislative framework to ensure reasonable access to cash.

After record growth in 2020, global demand for banknotes has returned to a normal situation. More recently, rising inflation and increasing interest rates have been negatively impacting cash balances. More concerning is the decreasing transactional use of cash, which puts pressure on the cash infrastructure. The cash community should make the case that cash is part of a critical public infrastructure, the maintenance and development of which should be financed accordingly.

In 2019, only around 15% of the value of cash in circulation was used for domestic transactions in France, while 25% was held for precautionary motives. Over half was held outside France, primarily outside of the euro area.

In 2021, global cash demand returned to a normal pre-covid distribution, which is quite remarkable after the exceptional growth in 2020. Looking forward, demand will be influenced negatively by rising interest rates and positively by geopolitical tensions. More than ever, a well-functioning cash infrastructure is essential to meet volatile demand.

To strengthen and safeguard the role of cash by facilitating open dialogue, the Austrian Central Bank has launched the Euro Cash 360° Platform, along with the Austrian Mint, social partners and other interest groups.

An ECB survey shows that cash is the preferred payment method for 24% of companies, ahead of other alternatives. Most companies also perceive cash as a cheaper, faster and more reliable payment instrument.

Last Friday, an internet outage disrupted debit card payments and banking services in Canada. Shops put up “Cash Only” signs, and many retailers lost sales revenue.

A groundbreaking EU Council Recommendation calls on member states to allow displaced persons from Ukraine to convert up to 10,000 Hryvnias per person, without charge, at the official exchange rate published by the National Bank of Ukraine.

Twenty-three Dutch organisations closely involved in the payments system signed a new Cash Covenant this week. The agreement seeks to ensure that cash continues to function properly as a payment instrument in the face of a steady increase in electronic payments.

Cash Talks is a series of webinars debating critical trends and issues in the cash space. The second Cash Talk focused on the issues arising from the parallel circulation of cash and Central Bank Digital Currencies.