Why Cash Matters
We love cash. No surprise there. But so does the public. Research shows that cash isn’t going anywhere. It is a crucial part of society, both as a payment method that is a key factor in a sound economy, and as a pillar for national identity. And we are not the only ones saying it. The European Central Bank says it. The European Financial Management & Marketing Association (EFMA) says it. And your fellow retailers say it. The list goes on and on.
“Cash still accounts for 70-80% of Point of Sale (POS) transactions and 50-60% in terms of value,” said Armin Greif, Head of Issue and Circulation, European Central Bank, Germany, at a recent EFMA conference. He continued to point out that it should be up to the public to choose the payment method, and that it is the responsibility of the stakeholders in the cash management process to make it as effective as possible.
“Even if cash declines, we estimate it will remain in a strong position.” …. “Society is not ready to abandon cash.”
The people trust cash
For those that claim that cash is being marginalized in society, they would only have to look as far as several central banks in the world. The Bank of England, The National Swedish Bank and The ECB, have, or are in the process of, renewing and modernizing the banknotes. This is an expensive and drawn-out process. If cash was dead, banks wouldn’t bother renewing them.
“People across the Euro area trust their banknotes. However, the Euro system should remain ahead of the curve, and that is why we are launching the Europa series: to increase banknote security, take advantage of technological advances and maintain public confidence at high levels,” said ECB Executive Board member Benoît Cœuré in a press release from the ECB conference on the release of the new series of Euro banknotes.
And the ECB is hardly alone in its quest to keep cash current. In England, the Bank of England is surveying the public to see how they feel about plastic banknotes. So security and effective cash management are key concerns for the major economic institutions. But cancelling cash is not. Cash is simply too important.
The people love cash
And cash, other than being a payment method, has emotional aspects that no other payment method does: National pride and sense of belonging. Take Scotland for example. They issue their own money there. The currency is still the GDP, but they have their own, Scottish, design. The Scots view their money as a statement of independence, and those that lobby for a sovereign Scotland also lobby for a sovereign Scottish currency.
The Bank of England got a hot debate on their hands when they were going to decide who should be on their new banknotes. Some 200 suggestions came in from the public, including Mick Jagger. When they finally revealed the images of the new banknotes, people were up in arms over that there was no woman on any of them. After a hot debate and many angry words, The Bank of England put Jane Austen on the GDP10 banknote.
So money matters. Financially, politically and culturally.