During the first year of the pandemic, a number of media headlines predicted the demise of cashMoney in physical form such as banknotes and coins. More as the number of cash payments dropped radically in a number of countries, under the combined pressure of the shutdown of entire sectors of the economy, an acceleration of digitalization and allegations that banknotes and coins were transmitters of Covid-19.

In April 2020, the Financial Times published an op-ed by former economic advisor to Donald Trump Gary Cohn titled: Coronavirus is speeding up the disappearance of cash. The author – who sits on the Board of two fintechs using blockchainAn unchangeable digital record where transactions are processed and verified by a network of independent computers rather than by a single referee. This decentralised structure has been described as an open distributed ledger. It supposedly enhances security as there is no single entity to be hacked. It also protects personal identity and guarantees that governments can’t block transactions or otherwise manipulate the payments space. The blockchain is the underlying technology supporting most ... More technology to share consumer credit data and secure mobile payments – stated that a shift to digital moneyFrom 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 goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More would eliminate the need to carry dirty cash and would put illicit enterprises out of business.

In June 2020, FT Alphaville editor Izabella Kaminska eloquently explained How Covid-19 has reframed the war on cash. For Kaminska, the demise of cash was initially customer-driven but it was then fueled by supply-side initiatives. She writes that “the public still has great trust and appreciation for banknotes, especially when times get tough. This in turn suggests people may be turning to digital transactions not because of convenience but because the crisis has made online purchases compulsory for many.”

Economists E. Beretta and D. Neuberger support this view and have analysed how Covid-19 has boosted commercial incentives and government policies to nudge consumers away from cash. In many countries, limits on contactless cards payments were increased; governments, banks and paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More service providers and retailers launched campaigns in favour of digital payments. Some retailers refused to accept cash altogether. An April 2020 report by the Bank for International Settlements concluded that the pandemic could speed up the shift toward digital payments. The authors warn that “This could open a divide in access to payments instruments, which could negatively impact unbanked and older consumers. The pandemic may amplify calls to defend the role of cash — but also calls for central bank digital currencies.”

One year later, and as the pandemic continues to wreak havoc across the globe, the rhetoric has shifted. Several organisations which were previously strong advocates of the digitalization of money and the elimination of cash now acknowledge that cash is not going away.

Cash 1 – Cashless 0

In an October 2020 interview Mastercard CEO Ajay Banga  stressed that financial inclusionA process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More will be a critical part of post-Covid-19 economic recovery. He recognised that cashless “is something we are not going to get to and probably shouldn’t”.

Cash 2 – Cashless 0

In April 2021, Yunzhong Cheng from the World Economic Forum – which has been a longtime proponent of digitalization – showed how slowing down the cashless frenzy could ensure a more inclusive society in East Asia. “Excessive “cashlessness” will lead to a new type of financial exclusion which deviates from the original intention of inclusive finance.” writes Cheng.

Cash 3 – Cashless 0

More surprising still the Better Than Cash Alliance has recently amended its mission statement which now claims “Our Alliance does not want to abolish physical cash, but rather, we aim for choice in how to make and receive payments. […]To be clear, we do we [sic] want to prevent people from using cash as sometimes it is the best or only payment option.” The Better Than Cash Alliance is a partnership of governments, companies, and international organizations that accelerates the transition from cash to responsible digital payments to help achieve the Sustainable Development Goals.

Cash 3 – Cashless 1

But not everyone believes in the future of cash. Anne Boden, founder and chief executive of digital bank Starling recently predicted on FT’s Money Clinic podcast that cash will disappear maybe as early as 2030, but more likely by 2033 or 2034. In 2016, John Cryan, the CEO of Deutsche Bank, speaking at the World Economic Forum in Davos, had made a similar prediction. “Cash, I think, in ten years’ time probably won’t [exist]. There is no need for it, it is terribly inefficient and expensive”. The panel was shared by Christine Lagarde, then head of the International Monetary Fund and Dan Schulman, President and CEO of PayPal.

Christine Lagarde has since been appointed President of the ECB and her signature appears on billions of euroThe name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. More banknotes.

This post is also available in: