Despite predictions that cash is going the way of the dodo bird, a new study by the Bank for International Settlements found that notion is more bluster than reality.
According to a report in Reuters citing the Bank for International Settlements, the study found that the use of cash is actually rising in both developed and emerging markets. “Some of the breathless commentary gives the impression that cash in the form of traditional notes and coins is going out of fashion fast,” said Hyun Song Shin, BIS economic adviser and head of research, according to Reuters. “Despite all the technological improvements in payments in recent years, the use of good old-fashioned cash is still rising in most, though not all, advanced and emerging market economies.”
The Bank for International Settlements found that in recent years, the amount of cash in circulation has increased to 9 percent of GDP in 2016 from 7 percent of GDP back in 2000. In Sweden and a handful of other countries around the world, cash in circulation has decreased in the same time frame, noted the report. That's not to say that debit and credit card payments aren't seeing growth. According to the study, debit and credit card payments represented 25 percent of GDP in 2016, up from 13 percent in 2000. Consumers own more credit and debit cards today and use them for smaller transactions than in years past, the Bank for International Settlements found.
Cash’s resiliency comes at a time when credit card, debit card and digital payments are taking center stage. Thanks to new technologies, consumers are using their mobile devices to pay for things in record numbers. At the same time, they are opting to use debit and credit cards instead of cash. That has led to predictions that cash is dying as the world moves to digital payments. Still, studies like the Bank for International Settlements’ underscore the important role cash still plays around the globe. “The resilience of cash as a social institution reminds us of the importance of understanding the economic functions of money, beyond just the innovations in technology,” Shin said in the Reuters report.
For more on the resilience of cash, check out the PYMNTS.com Global Cash Index™, a report that focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.