From 2007 to 2012, the volume of cash in circulation in the United States grew by 42%
It is a hot summer day in 2025. You are finishing a long meeting at the office. Some of your colleagues participated remotely from home, their faces and bodies projected as holograms onto chairs around the table. But you came to the office, and for that you are rewarded with light snacks consisting of lab-grown salami and grapes.
Then you go outside to get some fresh air and coffee. Cars on the roads are driverless, and people walk past you checking stock prices on the go with an internet connection implanted in their retinas.
You order a latte with soy milk. It is the only type of milk left on the market after the collapse of the dairy industry. You reach into your wallet and pull out several bills, folded in half with slightly worn edges. You smooth the bills before feeding them into the banknote slot of the barista robot…
Wait, stop, hold on! What worn-out banknotes in the future?! Surely in ten years no one will use cash, right?
Not exactly. Of course, it is hard to resist predicting the imminent demise of cash. But in reality, people have been predicting the disappearance of physical money for the last 60 years.
With the advent of credit cards, contactless payments, and cryptocurrencies like Bitcoin, the death knell for cash is ringing louder. It may seem that physical money will soon become a thing of the past, but if you look closely at the obvious—the almost intimate psychological relationship we have with banknotes and coins—you will find that predictions of cash's imminent demise are somewhat premature.
Natural, 'real' money has accompanied people for millennia, and for good reason. Cash is nearly impossible to trace, easy to carry, accepted everywhere, and reliable. If the power goes out or the electronic system that powers global online commerce fails, cash comes to the rescue. If someone wants to make a purchase without the payment being traced back to them, cash is the best choice.
Despite advances in modern technology, some properties of cash cannot yet be replicated in every detail. There is simply no alternative payment system that is as convenient, reliable, and anonymous. Cryptocurrency Bitcoin is anonymous, but still too volatile and inconvenient. Mobile peer-to-peer payment systems like PayPal or Venmo require apps and accounts, and are still easy to trace. Moreover, there is the important issue of global reliability. For example, two-thirds of US dollar savings are held abroad. People stash cash in piggy banks for emergencies, keep it as insurance, and make sure that in any unexpected situation, their trusty wad of cash is always at hand.
Although modern technological civilization is trying to develop a system that has all the properties of cash, it has not succeeded yet. That is why, as global cash usage statistics show, paper money and coins are doing quite well.
DIFFICULTIES OF ACCOUNTING
It is very difficult to express in concrete numbers the amount of cash used daily around the world. One of the key properties of cash is that it is hard to track. Nevertheless, existing data allow us to get some idea.
The first way to estimate the volume of cash is to count how much is in circulation. From this perspective, cash is far from disappearing.
In the United States, cash circulation grew by 42% from 2007 to 2012. The stock of American money in bills and coins is expected to grow by 5% annually. The average growth globally will be 7% per year. These data are given by Eric Ziegler, president of the security technology firm Security Technologies Group at Crane Currency, a banknote manufacturer.
This, however, is not the same as the amount of money changing hands in daily transactions. "No one can get inside an economy, count the number of banknotes, and estimate their value," says Daniel Wilson, an economist at the Federal Reserve Bank of San Francisco. "We cannot say exactly how many cash transactions occur on any given day."
To get an idea of money flows, economists have developed special models and conduct targeted studies. In the Netherlands, for example, economist Nicole Jonker and her colleagues at the Dutch National Bank conducted surveys they called a "diary study." They asked respondents to record the daily value of transactions made with cash and non-cash money. Based on the data obtained, Jonker and her team create a picture of how the Dutch purchase goods and services.
The case of the Netherlands deserves a closer look, since the retail sector in that country has recently shifted substantially toward bank card payments. Currently, there are 1,400 supermarkets where cash is not accepted at the checkout. As a result, in the last few years, card payments in the Netherlands have grown by 8% annually. And yet, cash still remains the queen of money. In 2012, the Dutch made 2.7 billion card payments, but the number of cash payments ranged from 3.5 to 4 billion. "Even in those supermarkets that accept debit cards, cash is still actively used," says Jonker. "In the foreseeable future, cash will continue to play an important role."
Research data from other countries is quite consistent with these findings. Half of all transactions made by consumers in the United Kingdom in 2013 were in cash. These figures are contained in a report published in May by the British Payments Council, now known as Payments UK. "According to the current forecast, this figure will fall below 50% next year, in 2016, but nothing predicts the complete disappearance of cash," the report states.
One study summarizes surveys conducted worldwide, similar to the one Jonker carried out. It found that in seven countries—Australia, Austria, Canada, France, Germany, the Netherlands, and the United States—between 46% and 82% of payments in 2012 were made in cash. Such a wide range likely reflects both uncertainty about research methods and differences between countries. Even those countries often perceived as leaders in the crusade for cashless payments, such as Denmark and Sweden, are not actually getting rid of banknotes and coins.
In June of this year, the media was full of headlines proclaiming that Denmark would get rid of cash by 2016. "Burn your banknotes: Denmark becomes cashless by 2016," read one. Nothing of the sort is happening, René Thomsen, a manager at the Danish Bankers Association, told me. "I think there was a certain misunderstanding about what the true meaning of the Danish proposal is," he said.
In Denmark, he explained, there is a rule that all stores must accept cash. The new proposal will allow some stores to bypass this rule. That's all. "I would be very surprised if we have no cash left in 10-15 years," says Thomsen. "It's hard to imagine that within the next 10-15 years you won't be able to go to a bank and say, 'I'd like a thousand dollars. In cash, please.'"
Read the continuation of the article:
CASH DOES NOT SURRENDER (Part 2)