In an increasingly digital world, cash seems like an unnecessary anachronism. But there are actually compelling reasons not to abandon cash completely.
Paper money accounts for just 20% of all financial transactions these days, down from 54% just 15 years ago. A fifth of Canadians no longer carry any cash around with them. But if we were to go completely digital, as some would have us do, we would probably regret it.
The Canadian government's Bill C-2, designed to make money laundering more difficult, would actually make the use of cash in general more difficult, by making large cash payments, donations and deposits illegal, and banning the use of "night drops" of business' cash earnings (which actually puts the businesses at higher risk). That has many people upset for a variety of reasons. It's also another step towards a completely cashless society, which, it is argued, would be a mistake.
First off, cash is not reliant on electricity, a communications network, or a secure payments system. The increasing prevalence of wildfires, hurricanes, earthquakes and other natural (and unnatural) disasters puts the whole system needed for digital transactions at risk. Case in point, back-to-back typhoons decimated the infrastructure of the Philippines just last month,.and the resulting devastation was made much worse by the breakdown in its financial system. Point-of-sale machines went down, e-wallets became useless, cellphones died, and Filipinos had no way to spend their money, even to buy a loaf of bread, in the county's almost-completely-digital financial system. A similar thing happened in China's Hainan province the previous year.
Digital finances are also vulnerable to hacking by malcontents and hostile countries. After Russia invaded Ukraine, physically and digitally, in 2022, cash use in Ukraine (and several other nearby countries) spiked, as the inhabitants worried that Russia would come for their life savings through cyber-attacks. And don't even get me started on the now regular hacking of bit-coins and other supposedly secure crypto-currencies.
Some people like cash because it offers an easy way to budget, and a hard cap on what they can spend, while credit cards and online transactions open up their entire borrowing limit, risking gross overspending.
Some 12% of Canadians don't even have a credit card at all, and rely on cash to survive. Victims of domestic abuse are encouraged to keep a stockpile of cash, just in case they are cut off from their funds. First Nations reserves pretty much run on cash, and many older people the world over use nothing else. Even many small businesses prefer cash, as it avoids those steep credit card fees.
I don't use much cash myself, particularly since the pandemic, when a lot of old habits bit the dust. But I always have some on hand, just in case.
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