According to the World Economic Forum, by 2028, only 9% of all transactions will be made with physical money. Since 2017, the use of cash has decreased by approximately 15% each year, mostly due to sociological aspects. In this perspective, CBDCs would be more of a prototype and even a warning rather than a project destined to succeed.
The forecasts for cash are not very encouraging. According to the World Economic Forum (WEF), by 2028, only 9% of all transactions will be made with physical money.
This eye-opening outlook raises an important question: Will we miss cash? Beyond the dilemma of cryptocurrencies about how many and which will survive the next five years, and whether its adoption expands or is squandered, the truth is that advances in digital payments do not seem to stop either.
Added to these two alternatives, with pressure and controversy, is the CBDC proposal.
World Economic Forum: By 2028, 1 in 10 Transactions Will Be with Physical Payments
Will cash registers disappear? According to an article published by the World Economic Forum, it suggests that it is likely.
However, beyond digital payment opportunities such as those of Visa and Mastercard, and the development of cryptocurrencies such as Bitcoin, Ethereum and Polkadot, the WEF attributes the gradual elimination of cash to the advance and possible acceptance of CBDCs in capitalist societies.
According to the thesis presented at the World Economic Forum, the development of CBDCs is accelerating. However, skeptics question the need to replace cash. While current electronic payment systems work well, they do not offer the same personal freedom as cash.
The Importance of Physical Money in the 21st Century and the Rise of CBDCs
Cash is the only payment mechanism that does not require anyone’s authorization to spend it, and it’s the only form of money that doesn’t leave a trace. Opting for a form of money like the CBDC would necessarily bring new challenges in the governance of the massive data that would be created.
Even under the naive assumption that a government or state derivative had no intention of monitoring said information, the truth is that this information would have been created unnecessarily, bringing with it unwelcome vulnerability, as well as the costs of managing and protecting said information.
Since 2017, cash usage has decreased by approximately 15% each year. Furthermore, it is estimated that by 2028, only 9% of all transactions will be made in physical cash. The direction is clear: cash will not disappear in a single explosive moment. However, its irrelevance is assured as a result of the individual decisions of millions of citizens and merchants.
This fact dissipates the arrogance that some regulators could fall into, when stating what is “right” or “wrong.” The decline in popularity of cash would therefore be due to a process of evolution of societies, rather than a simple whim of debate in congress.
The real debate about CBDCs would then move to the role of provider: the Central Bank or the private sector?
“A digital cash substitute is the essential product that citizens will demand once physical cash disappears. The private sector knows how to create attractive consumer products and is willing to help. However, the uniquely complicated regulatory properties of cash mean that only a central bank could actually deliver it.”
By Leonardo Pérez
