Bank of Canada: Is a Cashless Society Problematic?

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.

The research paper is available at https://www.bankofcanada.ca/wp-content/uploads/2018/10/sdp2018-12.pdf

Related Posts

Previous Post
Bloomberg editorial: Europe’s Banks Aren’t Ready for the Next Crisis
Next Post
NY DFS approves Coinbase for crypto custody

Fill out this field
Fill out this field
Please enter a valid email address.

X

Reset password

Create an account