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International Day for Disaster Risk Reduction: Cash Reduces Disaster Risk

Categories : Cash and Crises, Cash does not require a technology infrastructure, Cash is a public good, Cash is the first step of financial inclusion
October 13, 2021
Tags : Cash and Crises, Disaster, disaster recovery, Humanitarian
Those facing disaster quickly revert to that which they know and trust – the cash economy – whenever they can. This is because they find cash helps them become more resilient by enabling them to determine survival strategies for themselves rather than being subject to political and commercial manipulation.
James Shepherd-Barron

Disaster Risk Management Consultant, Author, and Founder of The Aid Workers Union

This post is also available in: Spanish

Among the survivors of the Japanese tsunami in 2011 was a sad, leather-faced old man, Ogata-san, who, when asked a few weeks after the tragedy what he would have done differently to prepare himself, answered, “I wish I had packed a decent pair of boots, my toothbrush … and some cash” … by which he meant the sort of money he could rely on, the sort of cash he could trust … the physical kind.

This true story is compelling in its simplicity. Cash is like a stout pair of boots – an essential survival technology – the benefits of which need to be carefully considered in a digitising world, especially one coping with crisis. Unlike electronic forms of money, cash – by which is meant physical currency in the form of coins and banknotes – is better trusted, universally accepted and more reliable than its digital equivalents in times of crisis. Cash is simple to stockpile and resistant to systems failures and power outages. As Ogata-san’s story shows, those lucky enough to have early warning of impending disaster stock up on cash as one of their first priorities if they can.

This point was reinforced by the Reserve Bank of New Zealand following the Christchurch earthquake of 2011 when it stated that “Access to physical currency is an immediate priority in times of national emergency, even in a country where 75% of transactions are normally made with electronic payments.”[1] It was also reiterated by the US Federal Emergency Management Agency (FEMA) earlier this year when it advised residents of New Orleans, bracing once more for the onslaught of another hurricane, to stock up on cash. As far as slow-onset crises are concerned, the majority of humanitarian cash transfer programme participants typically withdraw their full transfer balance in cash when it becomes available and rarely use their new bank accounts after programmes end[2].

They also know that digital money can be politicised. Digitisation allows the State to freeze access to digital money by any person or group it dislikes. “Cash acts as a guarantor of civil liberties in the event of an administration abusing its powers.”[3] If you think this a bit alarmist, consider the fate of the Rohingya in Myanmar, the Kurds in Turkey and the Tigrayans in Ethiopia, all of whom are subject to state interference in accessing cash.

In other words, those facing disaster quickly revert to that which they know and trust – the cash economy – whenever they can. This is because they find cash helps them become more resilient by enabling them to determine survival strategies for themselves rather than being subject to political and commercial manipulation.

 

 

[1] Alan Boaden, former Head of Currency at the Reserve Bank of New Zealand following the Christchurch earthquake of 2011

[2] Mercy Corps, 2014

[3] Global Justice Now, 2016

This post is also available in: Spanish

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