Is cash doomed to extinction?
The future of money in the age of digital currency is a hot topic right now. Here are my thoughts on the future of cash and how it might evolve.
Eliminating cash has huge potential benefits including convenience, security, and cost reduction for retailers, banks, and governments. For customers, there is the benefit of flexibility – a priority increasingly driven by younger generations more comfortable with digital technology and the online world.
The combination of these forces means the need for cash has reduced significantly. As my colleague, Steve Wells, reported, when travelling to events around the world over the last year, he has visit places as diverse as Romania, India, the USA, the Netherlands, Croatia, and Greece without any need for cash.
Another factor is that social insecurity may be a major motivation for people to avoid using cash in their daily lives. For example, within the western world at least, a rising share of people simply don’t have any money to convert to cash once they’ve met their weekly expenditures. Many young adults are weighed down with student loan debt, and without money in the bank and therefore no access to cash, the only other option is to use credit cards. Hence, financial inequality may itself be helping to make cash extinct in many economies.