Cash Use Across Countries and the Demand for Central Bank Digital Currency

Abstract

The level and trend in cash use in a country will influence the demand for central bank digital currency (CBDC). While access to digital currency will be more convenient than traveling to an ATM, it only makes CBDC like a bank debit card-not better. Demand for digital currency will thus be weak in countries where cash use is already very low, due to a preference for cash substitutes (cards, electronic money, mobile phone payments). Where cash use is very high, demand should be stronger, due to a lack of cash substitutes. As the demand for CBDC is tied to the current level of cash use, we estimate the level and trend in cash use for 11 countries using four different measures. A tentative forecast of cash use is also made. After showing that declining cash use is largely associated with demographic change, we tie the level of cash use to the likely demand for CBDC in different countries. In this process, we suggest that one measure of cash use is more useful than the others. If cash is important for monetary policy, payment instrument competition, or as an alternative payment instrument in the event of operational problems with privately supplied payment methods, the introduction of CBDC may best be introduced before cash substitutes become so ubiquitous that the viability of CBDC could be in doubt.

Comparative Analysis of the Changes in Cash Demand in Hungary

“…The OCR (online cash register) database, containing the data of stores required to use online cash Study Tamás Végső registers, 1 provides an accurate picture of purchase transactions broken down by various payment methods from 2015, but in order to examine a longer time horizon, it is more expedient to rely on other estimates. One possible methodas applied, for example, by Khiaonarong -Humphrey (2019) -is to compare the value of annual household consumption and the annual value of purchases made by electronic payment as shown in Figure 1. The Figure shows that while the value of electronic purchases has more than tripled since 2012, the remaining part of annual consumption -which may be considered a nearly accurate approximation of cash purchases -essentially stagnated.…”

“…Although we see numerous pilot and research projects examining the possibilities of implementation (Canada, China, Norway, Uruguay as per Mancini-Griffoli et al 2018), there are currently no practical examples of central bank digital currency today, with perhaps the plans of the Bank of Sweden in the most advanced phase (Söderberg 2018). The BIS (Barontini -Holden 2019) recently concluded an international survey on this topic, while the IMF (Khiaonarong -Humphrey 2019) published a comprehensive study on the same.…”

A magyarországi készpénzkereslet változásának összehasonlító elemzése

“…A vásárlási tranzakciók egyes fizetési módok közötti megoszlásáról 2015-től kezdve pontos képet ad az online pénztárgépek alkalmazására kötelezett üzletek 1 adatait tartalmazó OPG-adatbázis, ennél hosszabb időtávot vizsgálva azonban célszerű egyéb becslésekre támaszkodni. Egy lehetséges módszer -melyet például Khiaonarong -Humphrey (2019) is alkalmaz -az éves lakossági fogyasztás értékének és az elektronikusan fizetett vásárlások éves összegének az 1. ábrán látható módon történő összevetése. Az ábráról leolvasható, hogy míg 2012 óta az elektronikus vásárlások értéke több mint háromszorosára nőtt, az éves fogyasztás fennmaradó része -mely a készpénzes vásárlások jó közelítésének tekinthető -lényegében stagnált.…”

“…Kanada, Kína, Norvégia, Uruguay), a gyakorlatban megvalósult digitális jegybankpénzre jelenleg még nem létezik példa, a legelőrehaladottabb állapotban azonban feltehetően a svéd központi bank tervei állnak (Söderberg 2018). A témáról a közelmúltban a BIS (Barontini -Holden 2019) nemzetközi felmérést, az IMF (Khiaonarong -Humphrey 2019) pedig átfogó tanulmányt közölt.…”

Privacy as a Public Good: A Case for Electronic Cash

“…4 The effectiveness and profitability of such methods is expected to grow with advances in prediction tools (e.g., machine learning) and increases in computational power and the scale and scope of data gathering. 1 Khiaonarong and Humphrey (2019) report this trend in cash shares for various countries based on aggregate statistics. For national estimates of downward trends based on survey data, see, e.g., Kumar et al (2018, United States), Deutsche Bundesbank (2017, Germany) and Henry et al (2018, Canada).…”