The mythical ‘war on cash’ is not new and is well documented in economic literature. While the term “war” may not be appropriate – particularly when the world is waging a war against a virus – there is no doubt that the financial gains associated with the digitalisation of From 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 g... More and the colossal amounts of consumer data extracted from payments behaviour constitute solid motivations to join the battle.
The authors of the paper, E. Beretta from the Institute of Economics in Switzerland and D. Neuberger from the University of Rostock in Germany, argue that Money in physical form such as banknotes and coins. had been previously accused of facilitating illicit transactions and that the pandemic had created laboratory-like conditions, as well as new health-related justifications, to accelerate the drive away from cash. However, the fact that cash demand has surged during the crisis – often at unprecedented levels – shows that the approach is flawed and that cash is not replaceable.
The report reviews a number of policy measures adopted around the world, prior to as well the pandemic, to nudge consumers away from cash.
|Measure||Examples of adoption|
|See Demonetised banknote.||India 2016, Kenya 2019|
|Promotional ‘cashless’ campaigns||Visa; Paypal, Alipay|
|Abolishing high-denominations||Euro-area, Singapore|
|ATM closures||Euro-area, Sweden, UK,|
|Cash A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. Limitations||Belgium, Bulgaria, Croatia, Czech Republic, France, Greece, Italy, Poland, Portugal, Romania, Slovakia, Spain|
The authors conclude, that “cash remains an inclusive, privacy-preserving, public means of The discharge of an obligation in accordance with the terms of the underlying contract. In e-transfers the settlement may take days, whereas cash settlements are instantaneous and irreversible.”. Attempts to restrict its use or eliminate cash altogether, would create a “monopoly power of the private banking and financial system”; this, in turn, would have far-reaching implications in terms of financial exclusion, social discrimination as well as growing inequality which would only be aggravated by the economic recession. The pandemic has been accelerating the pace of digitalisation and its well-known side effects, the digital divide and the loss of privacy. “In sum,” plea the authors, “COVID-19 must (and should) not become a The expression refers to various policies by governments and campaigns run by other stakeholders, including providers of alternative payment instruments, aimed at reducing or at abolishing the use of ... More.”