Falling Use of Cash and Demand for Retail Central Bank Digital Currency

Author/Editor:

Tanai Khiaonarong ; David Humphrey

Publication Date:

February 4, 2022

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Cash use in most countries is falling slowly. On the margin, younger adults favor cash substitutes over cash. For older adults it is the reverse. Revealed preference tied to a changing population age structure seems to be the main influence on the demand for cash and why it is falling. Cash use may continue to fall, and card use (the main cash substitute) may fall by more, if CBDC is issued. The extent of this reduction depends on the demand for retail CBDC and the incentives (primarily transaction fees) that can play a determining role in CBDC adoption and use.

Series:

Working Paper No. 2022/027

Frequency:

regular

English

Publication Date:

February 4, 2022

ISBN/ISSN:

9798400200861/1018-5941

Stock No:

WPIEA2022027

Pages:

25

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