panel discussion the future of cash: a 10 year perspective - europe/thierry-lebea… · panel...

Panel discussionThe Future of Cash:

a 10 year perspective

Thierry LebeauxSecretary General

ATM & Cash Innovation14 June 2017, London

The prophecy

There will be a time – I don’t know when, I can’t give you a date – when physical money is just going to cease to exist.

Robert Reich, Economist;; former US Secretary of Labor

John Cryan, Deutsche BankDavos, January 2016

In 10 years, cash may probably no

longer exist. It is justawfully inefficient.

The Economist, 15 Feb 2007

• 3 years after all cash was removed, transaction fees increased 15% annually

• Climate change/natural disasters: long power cuts create payment uncertainty

• Hackers broke into payment and mobile systems;; billions of private funds are missing

2050: the nightmare scenario

The Conundrum

Access to cash is controlled by a stakeholder that has:

1. No interest in promoting cash

2. A strong interest in promoting its own competing products

War on cash = elimination of a competitor

(fair enough – unless you have control on the access to cash…)

Norway Central Bank’s presentation,

Paris, 11 April 2016

We could not have said it better !

Source: slides 6, 13 and 14 of Mr Leif Veggum, Norges Bank, Future of Cash Conference Paris 11-­12 April 2016

What if no alternative to electronic payments?

• How do you control your funds during uncertainty?

• How can a society function without payments during a disaster?

• What happens to transaction costs if there are only a few companies controlling all business?

• How do private people make payments between them ?

• How do you ensure financial inclusion of the less well-­off in society

X

Cash and Crime

Crime Cash

No Cash No Crime ?

Corruption ?

Source http://www.stiftung-marktwirtschaft.de/uploads/tx_ttproducts/datasheet/Argument_136_Bargeld_2016_01.pdf

Cash and Crime

Crime Cash

No Cash No Crime ?

Organised crime ?

Countries with upper cash paymentlimits are also those with the

highest estimated share of black economy

Source: Stiftung Markt Wirtschaft

Cash and Crime

Crime Cash

No Cash No Crime ?

Terrorism ?Most attacks are in countries with upper cash paymentlimits

Source: Europol 2016 “TE-SAT 2016”.

1. Certainty of acceptance Legal Tender

2. Immediate settlement Fastest settlement possible

3. No infrastructure requirement Key for P2P

4. Ease of useFor anyone

5. Ease of monitoringControls indebtedness

6. Privacy & AnonymityNot just for crooks!

7. State-­underpinningConfidence and very low risk

8. Financial inclusionNo alternative to the poors and vulnerables

Cash strong resilience

One single reason:

There is no perfect substitute to cash

9. Feel-­good factor

The reality: cash is still king

Source: G4S 2016 Cash report: www.g4scashreport.com

• Not a cash-­less society…55% of all payments are in cash

80% of all payments under €20 are in cash(source: ECB)

• Not even a less-­cash society Value of Euro Cash in circulation: €1,100 bn(That’s 5 times the amount of January 2002…)

Since the 2008 financial crisis, increasing value of ATM withdrawals : +15% (source G4S)

Cash payments still increasing in numbers, but at lesser pace than the rate of growth of all payments.

• Diversity of payment instruments kept costs low and competitive

• Investments in cash technologies led to a sharp increase of efficiency of cash

• Peaceful coexistence between cash and other means of payment has boosted consumers confidence

2050: the likely scenario

Re-­think the cash business

Cash is not free to users:• Cash pays for itself (seigniorage)• Cash is available primarily through ATMs: requires a bank

account and a card, both subject to fees

No one should feel forced to offer cash services • but no one should act against the availability of cash to

consumers• There are alternative circuits to get cash to users

A substantial reduction of the ‘cost of cash’ can be achievedthrough:

• Standardisation• Clarity on the role of NCBs• Shorter cycles, local recirculation• Stronger cooperation between banks and CMCs

A 10 years perspective…

“Forecasting is difficult –

particularly when it concerns the future”

J. Chirac

A word of caution: