Do We Still Need Physical Cash?

Livio Stracca ()
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Livio Stracca: European Central Bank

Chapter Chapter 4 in Redefining the Monetary Standard in the Digital Age, 2025, pp 99-113 from Springer

Abstract: Abstract The chapter examines the future role of physical cash in an increasingly digital economy. It acknowledges cash's historical significance and emotional connection for older generations, while noting its reduced appeal among younger people who prefer digital payment methods. Despite its drawbacks, such as facilitating illegal activities and being inefficient for online transactions, cash remains valuable for its universal access, safety, and privacy. The chapter discusses the negative aspects of cash, including its role in illegal activities and the Zero Lower Bound (ZLB) problem. At the same time, it also highlights the impracticality of eliminating cash entirely, likening it to fossil fuels in a green transition, necessary as a backup in case of digital failures. The chapter suggests that while cash's prominence might diminish, its complete phase-out is unlikely due to its resilience and reliability.

Keywords: Cash; Digital Economy; Privacy; Zero Lower Bound (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-89840-2_4

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DOI: 10.1007/978-3-031-89840-2_4

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