When Cashless Society prevents from Economic Recovery

The sudden, violent outbreak of the global COVID-19 pandemic thrust the cashless debate once again to the forefront of economic discourse around the world. Was now the moment to start doing away with cash for good? Would economic recovery be facilitated through the introduction of digital-only payment systems?

The “unprecedented demand” for cashless payments certainly convinced the cashless lobby that cashless economies would be the best way out of the resulting economic crisis. Dan Schulman, the CEO of PayPal, has asserted that digital payments have gone from “being a nice-to-have capability to a must-have essential service.”

The reality is, however, somewhat more complicated. In November 2020, the Bank of England released a report stating that although consumer spending has fallen, the total value of banknotes in circulation in the United Kingdom has increased, as people were “withdrawing some extra cash as a precautionary response to heightened uncertainty.” This is a trend that has been noted in several countries, and reflects similar behaviors during the 2008 financial crisis.

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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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