Cash still rules and will remain

Cash still accounts for a significant share of payment transactions in most advanced economies (Bagnall et al. 2016). However, it is a widely held presumption that the recent innovations of contactless, mobile and instant payments will accelerate the move to a cashless society. This would pose challenges to central banks who have a mandate to guarantee a safe, efficient and broadly accessible payment system. To counterbalance ongoing payment innovations and an expected strong decline in cash demand – as has been observed e.g. in Sweden – many central banks are now contemplating the introduction of electronic cash substitutes, i.e. central bank digital currencies.

But are recent digital payment innovations really accelerating the move to a cashless society? And will cash therefore become obsolete? To answer these questions, a research team from the University of St. Gallen and the Oesterreichische Nationalbank examined bank-account data for a random sample of over 21,000 customers of a Swiss retail bank. To ensure anonymity, all identifying client information was removed and the transactions aggregated on a yearly basis. The data covers all client transactions and cash withdrawals between 2015 and 2018. This is an interesting period, because starting 2016, the bank rolled out contactless debit cards to clients as their existing card expired.

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The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

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