Falling Use of Cash and Demand for Retail Central Bank Digital Currency

Tanai Khiaonarong · David Burras Humphrey

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Digital Transformation in Financial Services Monetary Policy and Economic Impact FinTech, Crowdfunding, Digital Finance

Abstract

Cash use in most countries is falling slowly. On the margin, younger adults favor cash substitutes over cash. For older adults it is the reverse. Revealed preference tied to a changing population age structure seems to be the main influence on the demand for cash and why it is falling. Cash use may continue to fall, and card use (the main cash substitute) may fall by more, if CBDC is issued. The extent of this reduction depends on the demand for retail CBDC and the incentives (primarily transaction fees) that can play a determining role in CBDC adoption and use.

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References

2019Cash and the Economy: Evidence from India’s Demonetization*2001Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice 2002Effect of Consumer Characteristics on the Use of Payment Instruments 2003Technology Adoption and Consumer Payments: Evidence from Survey Data 2016Explaining adoption and use of payment instruments by US consumers 2014Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data 2014Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data 2019Cash Use Across Countries and the Demand for Central Bank Digital Currency

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