Turning to Cash in a Crisis
If the COVID-19 pandemic is pushing us towards a cashless economy, a ‘small but significant slice of the population’ is determined to be left behind, The Spectator observes. Far from dropping cash, one in ten Brits are hoarding it at home to ensure when they need it, it will be there.
This behaviour is typically seen during crises. Between 2007 and 2010—the last economic crisis—cash in circulation increased by a third, from £38 billion to £50 billion. Given justifiable fears that a bank might permanently close its doors at any time, it’s hardly surprising people wanted cash on hand should it suddenly become less obtainable.
This time around, the banks seem to be on more stable footing, but times of financial uncertainty can increase concerns around the security of digital money. Physical cash offers certainty and tangibility that can’t be offered by numbers on a screen. Additionally, the collapse of German fintech giant Wirecard earlier this year—leading to balances being frozen on payment cards and apps that depended on the company—has shaken confidence in cashless payments.
Governments, central banks and the fintech industry can promote the benefits of cashless and incentivise cashless payment methods, but ultimately there will be those who remain unconvinced. For some—such as those without bank accounts—cash is the only option. For others, it is the only option they like.
Why not simply tolerate people using cash? I can see why it would suit a fintech start-up if the entire population was forced to use [its] services… but there is no good reason the rest of us should submit a cashless economy, and many reasons we should retain the right to pay with cash.