The future of cash in a digital economy is not certain, but it’s unlikely to disappear anytime soon. While cash payments are expected to decline, cash is still more convenient and trusted than digital financial services (DFS) for a large portion of the population.
Here are some factors that may affect the future of cash:
Digital currencies
Digital currencies, like Bitcoin, offer conditional anonymity and could increase the use of cashless transactions. Central banks are also researching digital currencies as a complement to cash.
Behavioral change
A significant behavioral change in societies is needed to achieve a complete digitalization of financial services.
Infrastructure investment
A significant investment in digital and financial infrastructure is needed to achieve a complete digitalization of financial services.
Transaction fees
The incentives that can play a determining role in CBDC adoption and use include transaction fees.
Economic growth
Falling data costs and economic growth factors are likely to benefit electronic payments.
National and regional adaptation
The pace of adaptation and policy reactions will be largely national or regional, reflecting different economic structures and social preferences.
Some countries, like Sweden, are already close to a cashless society, where cash has been diminished to around 1-2% of all transactions.
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