Cash ensures financial inclusion, resilience and trust, according to the president of the European Association of Cash Management Companies.
Guillaume Nonain is President of the European Association of Cash Management Companies.
Our payment systems are moving towards a digital frontier. Contactless cards, e-wallets and QR codes are everywhere, tempting some to declare cash obsolete. But as digital tools explode, we must not ignore a basic truth: cash is still important.
Cash is not just an alternative; it is essential to our economic resilience, financial inclusion and public confidence. And it is up to central banks, backed by European regulators, to protect its role in our rapidly digitising world.
Digital payments work well, until they stop working. Take the recent outage of CrowdStrike, which left millions of people unable to pay for groceries, fill up at petrol stations or even buy a coffee. When digital systems fail, cash remains the fallback alternative, regardless of power outages, network disruptions and cyber threats. In a world increasingly reliant on technology, cash provides a tangible and reliable safety net.
Central banks, charged with safeguarding monetary stability, understand this. Without cash, economies would be much more vulnerable to shocks. Europe's recent proposal on legal tender is a promising step towards ensuring that cash remains in circulation, providing a resilient backstop against unpredictable shocks.
Cash also plays a vital role in financial inclusion. In the EU, some 13 million adults do not have bank accounts and millions more lack digital access. For those who have limited access to high-speed internet, or are simply not comfortable with digital payments, cash is the only viable way to participate in the economy.
The European Commission's draft regulation on legal tender aims to ensure that cash is universally accepted throughout the euro area, giving people the choice of how to pay. But acceptance alone will not keep cash viable. Cash must also be accessible through ATMs, bank branches and retailers offering cash back services. To this end, European central banks and regulators must ensure that cash remains easy to obtain and use.
Central banks are responsible for ensuring a stable financial system, and a key part of that is to avoid excessive reliance on a single payment method. But only half of Europe's central banks have implemented a cash access policy.
When a few large players dominate digital payments, the market becomes more fragile. If these systems stop working, or private companies decide to raise fees or freeze the accounts of certain social categories, entire economies could feel the effects. Central banks have a duty to ensure that cash is available at all times as a public good and that fair competition and stable payments are maintained.
Cash represents something that digital payments cannot fully replicate: trust. Physical currency reassures people because it is tangible, immediate and free from third-party intervention.
Central banks, as custodians of public trust, rely on cash to connect citizens directly to the monetary system, offering a payment option that is universally accepted and not dependent on technology, which is why current initiatives such as the digital euro that may solve other dependency problems are not a panacea.
Ultimately, digital and cash payments can and should co-exist, giving citizens a real choice on how to transact. By promoting a balanced approach and renouncing their ‘neutrality’ stance, central banks can avoid a digital payments monoculture and maintain a stable and inclusive economy.
Legal tender regulation in Europe is a step towards achieving this balance, but to make our payments ecosystem fit for the future, we need all central banks to actively and publicly adopt policies that ensure the availability of cash and its ease of use.
In a nutshell? With the support of European regulators, central banks can build a payments system that is safe, inclusive and truly resilient. But to do so, they must be proactive in defending cash by incorporating access and acceptance as policy priorities.
For a robust digital future, central banks must keep cash in the game.
Fuente: The Banker