ECB member admits to lobbying for abolishing cash…

It does not get clearer than this. Yves Mersh who just a few days ago argued why cash still matters in Europe. makes another speech.

He makes a case for how various players are lobbying for abolition of cash:

There is now a large range of non-cash payment options available, such as credit cards, electronic payments, portable wallets and mobile phone payments to name but a few. As more people adapt to new payment options, there is a risk of disrupting banks’ business models. This makes it important for banks to remain agile in the face of these changes and to endeavour to meet their customers’ wishes.

We currently witness frequent lobbying, overt and covert, to abolish cash. I won’t dwell today on the plausibility of the justifications proposed, except to note that such lobbying fails to respect the will of the general population: cash remains popular. Recent research for the ECB finds that 80% of transactions at point of sale are in cash. Even adjusting for the value of transactions, cash still accounts for the majority. Indeed, the demand for cash currently outstrips the growth in nominal GDP.

There are valid privacy reasons for maintaining cash, and it provides the general public with direct access to central bank money. For an independent institution like the ECB, maintaining that link is important, which is why we place great emphasis on ensuring people’s continued trust in cash. For this purpose, we have overhauled the security features in the euro’s new Europa series. To date we have released new versions of the lower denominations – up to and including the 50 euro note. Next year we will introduce stronger and more secure versions of the higher denomination banknotes. Given this widespread desire to use cash, banks should facilitate rather than obstruct customers in using their preferred method of payment. Time will tell how the use of cash will evolve once instant payments are introduced in the near future.

So when Indian experts tell you how Indian government has fast forwarded the digitsation from a few years to few months, you know where all this is coming from. Just that in India’s case it is not covert at all. It is as straight in your face as any.

PS: Earlier the header was Central banker admits to lobbying for abolishing cash. However, based on Anantha’s suggestions, I have changed it to ECB member to make it more accurate..

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3 Responses to “ECB member admits to lobbying for abolishing cash…”

  1. Anantha Nageswaran Says:

    Good post. Thanks for the share. The header is misleading, though.

  2. Anantha Nageswaran Says:

    admits to ‘being lobbied’ or ‘facing lobbying’. This strikes me as though he lobbied for abolishing cash!

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