Cash is Essential, Says Reserve Bank of Australia
Jan 27, 2021
Dr Philip Lowe, Governor of the Reserve Bank of Australia, considers it unlikely Australia will become a cashless society, saying cash is essential as an emergency payment method when other options fail or are unavailable.
When a bank’s systems go down, or a vendor’s internet connection is not working, people are locked out of making card and electronic payments. If the downtime is brief, it is an inconvenience for customers and a few lost sales for the merchant. In circumstances where the disruption goes on for hours or days—perhaps due to a disaster, or a major cybercrime incident—people could be left unable to pay for essential goods and services, and businesses will lose all income.
Fortunately, in such circumstances, cash will save the day.
In almost every case, you can guarantee that you can use cash to make the payment, so I think many people will want to hold cash.
Dr Lowe notes that in the early days of the COVID-19 pandemic, people were anxious about what was to come, and withdrew cash from their accounts to store at home. In a worst-case scenario, if banks were closed and cashless transactions became unavailable, they could depend on cash to cover the essentials.
The Big Smoke (TBS)—a site covering topical issues in Australia—explored the limitations of cashless payment options during the pandemic, with privacy being a key concern. Digital transactions being tracked and recorded raises ‘legitimate questions about surveillance and who has access to these data trails’. It further pointed out that the technology itself is vulnerable to glitches, power outages and security breaches, citing an instance where supermarket chain Woolworths suffered a technical outage that left shoppers unable to pay and meant stores had to close.
TBS also highlighted people who lack regular online connectivity, and those who need to flee domestic violence as being especially reliant on cash to survive. People in abusive relationships commonly have few resources since their abuser controls everything, including household finances. By gradually, secretly saving up notes and coins, they can pay for travel and essentials when making an escape.
While adding choices to the payments landscape can be advantageous—enhancing people’s freedom to select the option that best suits their needs—removing them limits choice, and when it’s cash at risk of being removed, the fallout can be more serious still.
Fortunately for Australians, their national bank recognises the value and essentiality of cash.