It appears that strong support for cash among individuals in the EU is increasingly being recognized — and it seems to be gaining traction at the EU legislative level as well.
"While the discussions on the role of cash and the digital euro have taken weird directions during the past 12 to 18 months, we are pleased that tenor is changing on the EU legislative level,” said Tanja Kulisch-Ziemens, Secretary General of the Ligue’s Cash Chapter. “The Ligue welcomes the current developments to combine the legal acts on cash and the digital euro into one single currency package and re-open the discussions on the importance of cash for society and economy.”
These developments recognize both the popularity of cash and its importance to economic resilience, according to Kulisch-Ziemens. “On the one hand, this provides cash with the importance that most of the population in the EU would like to see. On the other hand, politicians and legislators are also considering the need to maintain the resilience of the economy and financial flows.”
Still Popular, Always Critical
While payment options continue to grow, the popularity of cash remains extremely strong in Europe, as noted in the 2022 SPACE study by the European Central Bank (ECB) (Study on the payment attitudes of consumers in the euro area (SPACE)). “Cash still plays an important role. It remains the predominant payment method at the point of sale [used in 59% of transactions] and for person-to-person payments,” explained Fabio Panetta, ECB Executive Board Member.
Additionally, “the majority of euro area consumers considered having cash as a payment option to be important or very important,” according to the study. Even in countries where the use of alternative payment methods are particularly high, such as Belgium and Luxembourg, “the importance of cash remains at a high level,” the study observed.
Support for cash is also seen at the association level, according to workshops conducted by Deutsche Bundesbank's with 27 associations and organizations from across society. “Civil society organisations do not want an exclusively digital or analogue future for payment transactions. Rather, the focus should be on keeping different options available to users.”
There is concern that the importance of cash is currently still underrepresented in the public discussion, according to the workshop summary. “In several workshops, the importance of cash for the individual and for society as a whole was highlighted. Cash contributes both to social participation and personal independence of individuals as well as to the resilience of society and payment systems as a whole.”
Convenient, anonymous, trusted, tangible, ubiquitous—it’s easy to see why the habit of paying cash persists. And there are also strong indications that the desire to have the option of using cash will persist.
In late 2023, BearingPoint surveyed 8,114 people in Germany, Finland, France, Ireland, the Netherlands, Austria, and Switzerland. Like ECB study, it found that cash is still king.
“Cash is by far the most popular payment method in Europe. It is so high partly due to the fact that in uncertain times, cash is perceived as particularly familiar and secure,” said Christian Bruck, Partner and Payments Expert at BearingPoint. “Cash remains highly valued, reflected in the strong majority favoring cash in the next five to ten years.”
A clear majority of the survey population said they cannot imagine a world shunning cash, according to the announcement of the study’s finding (Cash is number one in Europe). It also found that while understanding of the digital euro is not ubiquitous, there was support for the European Central Bank’s official position that the digital euro is not intended to replace cash but to complement it.
The European Central Bank has indicated that it understands that cash is vital for a resilient and equitable economy. “A healthy payment system guarantees access to different payment options as well as the freedom to choose,” the ECB noted in a Feb 6, 2023, blog post. “As cash remains widely used and valued, we are committed to maintaining euro cash and will continue to make sure it is available.”
“We will continue to support the availability of different payment instruments” European Central Bank, Feb. 2023
In addition to respecting people’s desire for cash, there appears to be a growing recognition at the EU legislative level that reliance on digital payments makes societies less resilient. “Widespread outages recently are a reminder that electronic payments systems can mean centralized points of failure for society— and not just technical failures, but also security failures. Cash is also critical on an individual basis: if a hacker, bureaucratic error, or natural disaster shuts a consumer out of their account, the lack of a cash option would leave few alternatives.
“The recent global IT outage and an increasing number of attacks on critical infrastructures show how important it is to have a functioning Plan B,” — Tanja Kulisch-Ziemens, Secretary General, Cash Chapter, International Security Ligue