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Is a Cashless Society Problematic?

Walter Engert, Ben Fung and Scott Hendry ()

Discussion Papers from Bank of Canada

Abstract: The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict a cashless society in the future. This paper considers the implications of the abandonment of the use of cash in the future. More specifically, we look at a variety of ways in which the emergence of a cashless society could affect key concerns of a central bank, including seigniorage, monetary policy, payments and financial stability considerations. We find that a cashless society would not generally cause material, system-wide problems. There are a few areas, however, where concerns could emerge: the maintenance of both operational reliability and contestability in retail payments, and the provision of a safe store of value in an (extreme) financial crisis. We note policy options to address these potential concerns.

Keywords: Bank notes; Digital currencies; Financial services; Payment clearing and settlement systems (search for similar items in EconPapers)
JEL-codes: E E4 E41 E42 E5 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocadp:18-12

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