Cash is still king and will always be around - Deutsche Bank

FXStreet reports that in the view of economists at Deutsche Bank, cash will not likely disappear soon. In fact, the amount of cash in circulation has been surging and, more recently, the COVID-19 pandemic has caused the demand for cash to skyrocket.

“Last week, the European Central Bank (ECB) reported that the circulation of euro banknotes surged 12% over the past year. That was the highest growth rate in a decade and more than double the growth rate of 2019.”

“Among consumers, cash remains king. People regard cash as a ‘store of value’ and a ‘safe-haven.’ According to our proprietary survey of 3,600 individuals across the UK, US, China, Germany, France and Italy, one-third of Americans and Europeans rank cash as their favourite payment method.”

“Moving cash from under the mattress into a bank account is unlikely to happen (at scale) in the near-term. In normal times (i.e., when there is no pandemic), consumers have little incentive to deposit or save money in a context of low or negative interest rates... Looking ahead, in a context of low inflation rates, most central bank interest rates in advanced economies are expected to remain unchanged until at least 2022.”

“Low-interest rates are a barrier that hinders populations in advanced economies from adopting central bank digital currencies (CBDCs). This barrier is less of a concern in most emerging economies (especially China) because they have higher interest rates.”