Can cash hold its own? International comparisons: Theory and evidence

Abstract

A number of papers predict the imminent demise of currency use in transactions while some make a case for its continued use due to its distinctive feature of anonymity. Notwithstanding the latter, this paper shows on both theoretical and empirical grounds, that cash use is sustainable for the foreseeable future because of the cost competitiveness of ATM networked cash to the consumer relative to electronic POS card substitutes. Indeed, since the mid-1990s, Finland, Canada and France which are countries in the vanguard of EFTPOS development, have experienced a resurgence of ATM cash use as measured by its expenditure share.