LONDON, 12 March 2018:
Even though more people now use cards, mobile phones or even facial recognition technology – to pay street performers, buy pizza or donate to church on Sundays – hard cash is showing no signs of dying out, central bankers said.
The Bank for International Settlements (BIS) said cryptocurrencies and the debate around them – such as whether cash will be replaced by virtual substitutes – are part of a broader debate about the nature of money.
The BIS is an umbrella group for the world’s central banks so its reports are seen as an indicator of the thinking that goes on behind the closed doors of its quarterly meetings.
The payments sector has argued the use of cash is falling and therefore they don’t need to provide as many ATM machines or bank branches.
But in the BIS’ latest quarterly review, researchers took a closer look at whether cash is becoming a relic of the past as some claim.
“Some of the breathless commentary gives the impression that cash in the form of traditional notes and coins is going out of fashion fast,” said Hyun Song Shin, BIS economic adviser and head of research said.
“Despite all the technological improvements in payments in recent years, the use of good old-fashioned cash is still rising in most, though not all, advanced and emerging market economies.”
Cash in circulation has actually risen in recent years, from 7% of GDP in 2000 to 9% in 2016, although it has fallen in Sweden and a few other places.
“The resilience of cash as a social institution reminds us of the importance of understanding the economic functions of money, beyond just the innovations in technology.”
Still, debit and credit card payments are rising as well, from 13% of GDP in 2000 to 25% in 2016. People hold more cards and are using them for more and smaller transactions, Shin said.
– Reuters