Sometimes and in some places cash is still king

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G4S is not a usual source of data here, but the FT had a link to a report they wrote today and I thought some of the findings worth sharing. The report was on the use of cash in the global economy, and on related trends in electronic payment. G4S move cash around the world: they have an interest in this issue. This is the key diagram they published:

And these were their key facts (some of which are just curiosities, I admit, but others of which add real data):

1. Cash remains the most widely used payment instrument in the world on all continents. Cash in circulation relative to GDP has increased to 9.6 per cent across all continents, up from 8.1 per cent in 2011. South America has by far the highest cash dependency relative to its GDP (16 per cent)

2. Globally, the value of ATM withdrawals experienced a positive (average weighted) growth rate of 4.6 per cent in 2015. In North America, the value of ATM withdrawals has largely stabilised, growing only marginally, however cash is still used for over 50 per cent of small-value transactions under $25.

3. In Europe 79 per cent of point of sale transactions are in cash. In 2016, 60 per cent of all transactions in Europe were made in cash.

4. 75 per cent of countries report cash is used in over 50 per cent of transactions. 24 of the studied countries had available cash surveys. Of those, 18 reported that cash was used in over 50 per cent of transactions.

5. Businesses that do not typically accept cash have seen growth when they introduced a cash option. Uber, who’s biggest selling point is their electronic payment system, saw exponential growth when they introduced a cash option in Asia, Africa and South America.

6. In many countries in Asia and the Middle East, 3 in 4 online purchases are paid for by cash on delivery. The increase in online purchase has not taken cash out of the equation.

7. Just two countries show a significant decline in cash payments. In South Korea (cash use 14 per cent) the government has a project in place to reduce coin circulation, while in Sweden (cash use 20 per cent) electronic payments have seen a huge rise.

8. Paper money was introduced during the Song Dynasty in China in the 11th century. Coins first appeared approximately 2500 years ago. The first European banknotes were issued by Stockholm’s Banco, a predecessor of the Bank of Sweden, in 1661.

9. Two thirds of people in the world have a bank account. Cash is fundamental to financial inclusion.  It allows everyone, including the unbanked, to participate in our day-to-day society. There are just under a third of the world’s population (2 billion people) without access to a bank account.

10. There are 164 official national currencies circulating around the world. Some of the 197 countries share the same currency (most notably the 19 countries in the Euro area), while others have more than one currency within their country (such as Panama and Bhutan).

What are the takeaways?

First, cash is still going to play a role in society for some time to come.

Second, sovereign governments need their own currencies: the Euro was never going to work.

Third, if cash is to survive then means to prevent its abuse are essential. The elimination of high-value notes is key to this.

Fourth, so too are effective money laundering rules. The UK's departure from the EU undermines our chances of being effective on this issue in the future.

No doubt there are others. But I do think it important that we recall that the physical printing press still has a role to play.