International Currency Association

Dr Dalinghaus, Visiting Professor of Anthropology at Ripon College, is also an affiliated scholar at the Institute for Money, Technology & Financial Inclusion (IMTFI), University of California at Irvine, which has made itself a name as one of the leading institutes when it comes to the role of money in people’s daily lives and practices, and to the best way to go about financial inclusion.

The Director of the IMTFI is Professor Bill Maurer, Fellow of the American Association for the Advancement of Science, Fellow of the Filene Research Institute, Dean of the School of Social Sciences and Professor of Anthropology at the University of California, Irvine. He will also be one of the keynote speakers at the ICA’s Global Currency Forum 2020 in Barcelona.

This white paper by Dr. Ursula Dalinghaus, Visiting Professor of Anthropology at Ripon College and affiliated scholar at the Institute for Money, Technology & Financial Inclusion (IMTFI) University of California, takes a close look at the role of cash in society and the specific characteristics making it a public good, citing relevant studies, scholars and field experiments.

"Cash in circulation is growing on a global scale by approximately 3% per year; 80% of all payments worldwide are cash transactions. Cash is an essential part of every stable financial and economic system", stated ICA Chairman Wolfram Seidemann. "This paper demonstrates that cash is more than just a means of payment. It is a public good, part of modern life and vital for people's everyday lives."

Key takeaways

Cash is a public good that guarantees ease of use, accessibility, privacy, and many other unique qualities in local, national, and global monetary systems. Cash fulfills both criteria for a public good: it is non-excludable because its function as a means of payment, of transfer of value, works without compensation. And it is non-rivalrous because its use by one person does not preclude its use by another.

Cash is public – the only form of money not controlled by a private, profit-driven entity. Once in circulation, it is the only form of payment independent of its issuer. It is deployed not to make a profit on its transfer but to support and sustain value transfers free of charge. There may be costs associated with cash, but cash itself is a means of value transfer that settles at face value with no fees involved.

Cash enables personal freedom and self-determination – state-issued physical cash is a distributed public infrastructure that allows citizens and users to create a space outside the state. At the same time, cash acts as a claim upon central banks and, ultimately, states to ensure good governance of monetary and payment systems.

The materiality of cash is vital to many social practices. The role cash plays in social relationships often hinges on the physical design of cash, such as denomination, which makes cash particularly useful for budgeting, accounting, gifting, or saving.

On August 1st, 2019, Cash Matters published the white paper Virtually Irreplaceable – Cash as Public Infrastructure by Dr. Ursula Dalinghaus, making a case for how and why cash must be understood as a public good.

New study by IMTFI postdoctoral scholar finds efforts to curtail cash use hurts poor and does little to stop terrorism financing

Over the last decade there has been a revolution in payment technologies. Digitization of bank accounts, new digital payment applications, and an array of new kinds of financial products and services have opened up a wide range of choices for storing, saving, sending, and receiving money. Digital finance has become an important tool in efforts to facilitate formalfinancial inclusion across the globe.

And yet, cash has also remained an essential tool for people’s financial practices and lives alongside these new payment forms. Evidence from both developing and developed payment markets shows that while digital payments may have increased exponentially, the demand for physical banknotes and coins has kept up with the pace of digital finance. Physical currency or physical accounting devices are ancient and crosscultural technologies, in continuous use since at least 1600 B.C. Aside from risks and benefits, they are wedded to an incredibly durable set of behaviors and social practices.

People use diverse payment methods (from cash, to cards, to payment applications and other alternatives) together. However, the ability to move between diverse payment forms, especially cash, has also featured prominently in criminal activities, including money laundering, tax evasion, and terrorist financing. This has led government authorities, law enforcement, and other entities to target cash in particular as the supposed core method – and problem – in such activities. The European Commission proposes to institute a cash transaction limit across the EU, claiming that it will prevent money laundering, terrorism, and crime. This follows the decision by the European Central Bank to end issuance of the 500 euro note beginning in 2018.