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In the War on Cash, Words Count

Categories : Cash ensures competition among payment instruments, Cash is also a store of value
April 2, 2019
Tags : Cash substitution, Store of value, Usage, War on Cash
Words have been turned into weapons in the war on cash and are used by the proponents of the elimination of cash to create a self-fulfilling narrative of the inevitable decline of cash.
Guillaume Lepecq

This post is also available in: Spanish

“In war, truth is the first casualty” Aeschyllus (c. 525/524 – c. 456/455 BC)

The term ‘cashless’ is probably the most obvious illustration of how words are used to undermine the image of cash and has clearly become the buzzword in payments during the past few years. Here are some of the headlines published during the past weeks.

But what does cashless actually mean?

Shops are going cashless when they cease to accept cash. Digital payments are cashless. And countries are adopting strategies to become cashless. Anti-cash campaigners would like us to believe that the adoption of everything digital – commerce, banking, identity and of course payments – is inevitably related to the disappearance of cash. Nothing could be further from the truth.  The Bank For International Settlements showed in its quarterly report dated March 2018, that cash in circulation had grown from 7% of GDP in 2000 to 9% in 2016 in Committee on Payments and Market Infrastructures (CPMI) member countries, with the largest increases being recorded in Hong Kong and Japan (by 9% and 7% of GDP, respectively).

The term cashless is so misleading that it has led to another neologism: ‘less -cash’.  Kenneth Rogoff , author of “The Curse of Cash” claimed that his message had been misinterpreted: “I favor a less-cash society, absolutely not a cashless society, because I think there are issues of privacy, having robustness to power outages is very important.”

But less-cash is just as meaningless. Less cash than what?  And who decides what is the right level of cash in society?

You say hoarding; I say saving 

‘Hoarding’ is another term which contributes in damaging the image of cash. According to the Merriam-Webster dictionary, the definition of to hoard is  “to collect and often hide away a supply of to accumulate a hoard.  In other terms, hoarding represents one of the core functions of money:  the store of value function. However, when money is stored in digital form, for instance on a bank account, it is called savings and is perfectly legitimate. When it is stored in cash, it takes on a negative connotation of concealment.

Cash is far more than a payment instrument

Another term may apply less biased but is misleading when it applies to cash: use. Indeed, headlines will regularly claim that cash use is declining. On 11 September 2018, the BBC published an article titled “Cash use falls further as plastic payments rise” The article explains that the share of cash as a payment instrument has been declining slowly (by 1%) in the UK. But the use of cash is not limited to payments. It is also used as a store of value, as a budgeting instrument, as a back-up in case of an emergency, or a collector’s item. And all these uses are perfectly legitimate.

This post is also available in: Spanish