Reports and Publications

A new paper explores the current role of cash and the probable design of a future Central Bank Digital Currency (CBDC) in the euro area, the digital euro. It asks if there is a possible crowding out of cash by the digital euro or, more likely a co-circulation.

The Bank of Finland estimates that the social costs of retail payments amount to 0.3% of GDP. Card payments represent 39%; credit transfers 38% and cash 23%. In terms of the cost per transaction, a card payments costs 15 cents versus 22 cents for a cash payment. Banks have increased their payments revenue, but merchants have not benefitted from the digitalization of payments.

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.

A new paper by the Central Bank of Turkey found that financial literacy reduces cash's transactional demand but increases its precautionary demand as a store of value, leading to an expansion of cash in circulation.

Almost half of the respondents surveyed by the Austrian central bank have no interest in a digital euro. Half of those who expressed interest stated that cash should retain its relevance.

A new paper analyses the stabilizing effect of cash on the money supply in times of crisis. It concludes that supply-driven reductions of cash in circulation (by demonetization or capital controls) destabilize the economy if electronic payment substitutes are not instantly available.

A Bank of Canada report evaluates access to cash amongst remote First Nation reserves. On average, the travel distance to the closest bank branch is 24 km, while the nearest white label ATM is 4.5 km away.

Cash payments in the United States grew in 2021, following a sharp decline in 2020, according to the Federal Reserve’s 2022 Diary of Consumer Payment Choice.

A Royal Society for Arts report found that 48% of the population (25 million people) thinks the disappearance of cash would be problematic, and 10 million people would not know how to cope.

The Federal Reserve has been investigating the implications and the key conceptual models for a Central Bank Digital Currency (CBDC). The paper is a first step in recognising the benefits and risks of a CBDC and fostering a broad and transparent dialogue with the public.

Some are calling it the ‘New Space Race’. Or is it mere turf wars, marred by self-interest? In any case, central and commercial banks – the traditional issuers of money – are being challenged today by a flotilla of disruptive newcomers from FinTechs and telcos, to digital platforms and emerging crypto-assets.

The Euro Retail Payments Board report finds that both access and acceptance of cash are broadly ensured throughout the euro area but are deteriorating. The paper identified specific issues related to access to and acceptance of cash and recommends monitoring this in the future to ensure that cash remains an inclusive, efficient and sustainable means of payment.