November 2022
EDITORIAL: When will cash disappear?
A question that is often asked, besides what will happen to low utility / low value coins, is how long will cash be in existence in this rapidly digitalising world.
The typical response is that as long as there are consumers in society who are socially and economically disadvantaged, or are elderly, or have a mistrust of technology, or are fearful of loss of privacy, or are just unwilling to change because of tradition and culture, then cash and coins will continue to be used and therefore in demand.
That would suggest cash will continue to be a medium of exchange, particularly for small value transactions, for a considerable time into the future. Given that 17 per cent of the world remains unbanked, perhaps it will be decades.
Over the past twelve months we have presented and discussed six key reasons why cash continues to be in demand and will continue to be so for the foreseeable future:
- when technology fails
- to protect ‘privacy’ for those fearful of loss of identity, being tracked by marketing or having their identity stolen
- to make it easier to make a charitable donation
- to help teach financial literacy
- for daily, weekly and monthly budgeting and financial management by those on very low net incomes struggling just to ‘survive’
- to facilitate financial inclusion eg. for those on low incomes and elderly consumers.
While ever these legitimate reasons remain for cash – notes and coins – to be used and therefore demanded, Central banks and policy makers are unlikely to decree, as has been attempted unsuccessfully by at least one country, to become entirely cashless.
Cash will continue to be part of the transaction environment for a while yet!!