The New Cash Paradox

The end of the ‘cash era’, announced by The Economist 15 years ago, has not arrived. On the contrary, in a contactless but crisis-ridden world, cash is leaving wallets and taking refuge in mattresses. This article from Marc Schwartz, Chairman and CEO of Monnaie de Paris, was first published by Cash Essentials.

In 2007, The Economist published a feature entitled ‘The end of the cash era’. The cover featured a magnificent illustration of a dinosaur made of coins. The message could not have been clearer: ‘Cash, after thousands of years as one of humanity’s most versatile and enduring technologies, looks set to disappear slowly but surely over the next decade and a half.’

Yet the exact opposite has happened. According to the ECB, the value of cash in circulation in the eurozone has increased by 2.3, from €700 billion at the end of 2007 to €1,600 billion at the end of 2023. According to the Fed, the value of US dollars has almost tripled, from $820 billion to $2,333 billion. If we relate these figures of cash in circulation to GDP, the picture is similar: the ratio has almost tripled in Europe (from 5% to 13% of GDP), increased by 50% in the United States (9% of GDP compared with 6%) and by 77% in Japan (23% of GDP compared with 13%).