Cash is unlikely to disappear anytime soon despite declining use as a payment method and the surge of digital currencies, Germany’s largest bank says.
Deutsche Bank, a German multinational investment bank that previously predicted that cryptocurrencies will replace fiat by 2030, now claims that cash “will be around for a long time” as a preferred method of payment.
Deutsche Bank Research issues three reports on the future of payments
The bank has forecast a tentative future for cash in one of its recent “The Future of Payments” reports carried out by Deutsche Bank’s research arm Deutsche Bank Research. Titled “Cash: the Dinosaur Will Survive … For Now,” the report was issued on Jan. 21 and represents the first part of a series of reports on the future of payments. The second part, called “Moving to Digital Wallets and the Extinction of Plastic Cards,” was published on Jan. 23, while the third and final part of the series, “Digital Currencies: the Ultimate Hard Power Tool,” was issued on Jan. 27.
Despite expressing its confidence that cash will remain a major payment method in the near future, Deutsche Bank admits to a growing role for the ongoing digital payment revolution. The bank wrote in its “Cash” report:
“In this report, we argue that cash is unlikely to disappear anytime soon. However, a real digital payment revolution has been underway for the past ten years. Cash is losing ground as a payment method. Several countries have recently removed large notes worth $100 or more and implemented policies to replace traditional payment methods with digital solutions. In the midst of these changes, non-sovereign cryptocurrencies pose a threat to political and financial stability.”
Over 50% of people in developed countries believe that cash will always be around
As part of the cash-focused report, Deutsche Bank Research conducted a survey indicating that a third of people in developed countries consider cash to be their favorite, while more than 50% are sure that cash will always be around. Additionally, the bank found out that Germans hold the highest average rate of cash among advanced economies, which accounts for 52 euro or about $57 at press time. According to Deutsche Bank, Germany plans to use even more cash in the coming six months.
The world’s two most populous countries encouraging greater use of digital currencies
Deutsche Bank further outlined that the future of cash will greatly depend on further developments in China and India, which are the world’s two most populous countries. Specifically, the bank emphasized that both countries have been encouraging greater use of digital currencies and blockchain. As such, China's President called for the country to accelerate its blockchain adoption in late 2019, while India’s securities regulator recently urged on Jan. 23 that exploration of the best possible usage of blockchain in securities markets.
As China has reportedly seen progress with its government-backed digital currency, Deutsche Bank warned that the adoption of such a currency poses a serious threat to the United States dollar:
“China is working on a digital currency backed by its central bank that could be used as a soft- or hard-power tool. In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market.”
As to the growing trend of crypto and blockchain industry, Deutsche Bank has also been actively working in the developments in this area. In September 2019, Deutsche Bank joined JPMorgan’s blockchain-based network, the Interbank Information Network to reduce the cost of processing difficult payments and offer better client services.