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

February 4, 2022

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Format: Chicago

Tanai Khiaonarong, and David Humphrey. Falling Use of Cash and Demand for Retail Central Bank Digital Currency, (USA: International Monetary Fund, 2022) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Central Bank digital currencies, Currencies, Digital currencies, Financial markets, Household consumption, Money, National accounts, Payment systems, Technology

Keywords: Africa, Card payments, Card substitution, Cash, Cash share, Cash substitute, Cash use, Central Bank digital currencies, Central bank digital currency, Currencies, Digital currencies, Household consumption, Payment substitution, Payment systems, Use of cash

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/027
Stock No:

WPIEA2022027
ISBN:

9798400200861
ISSN:

1018-5941

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