Deutsche Bank Macro Strategist Marion Laboure has penned a write-up for the World Economic Forum (WEF) site, that focuses on some of the Switzerland-based informal group’s favorite talking (and policy) points: CBDCs, and the ultimate demise of cash.
Laboure singles out Sweden, Brazil, and China as those countries that have made particular strides in moving toward digitized versions of central bank-issued currencies (CBDCs) – a centralized model favored by government and economic elites – not to be confused with decentralized cryptocurrencies.
In fact, such is the enthusiasm that the Deutsche Bank official sees the future dominance of CBDCs, taking over at the expense of cash as something “inevitable.”
The pandemic is “credited” with expediting matters on this front, particularly in Sweden, while the rate at which governments seem to be moving in the CBDC direction is either alarming, or impressive, depending on how you view the trend: the article mentions that 90% of central banks around the world are now in the process of creating and/or trialing one, while that number has double in only one year.
Laboure picks an interesting angle to “sell” CBDSs, considered as highly controversial by a significant number of privacy and security experts: allegedly better physical safety.
It seems that the pandemic was not the only force driving Sweden to be turning away from cash, but also powerful appeals to emotions delivered by public figures, such as ABBA’s Bjorn Ulvaeus apparently believing the presence of cash is the reason homes get burgled (it was his own son’s experience with burglars that prompted this “anti-cash evangelism.”)
Ulvaeus was not alone, because the Swedish government has been fully on board for at least a decade now.
And the desired results were inevitable. “According to a 2020 survey by Riksbank, from 2010 to 2020, the proportion of people in Sweden who used cash fell from around 40% to less than 10%,” the Deutsche Bank strategist writes.
In China these figures show decreased circulation of money to 8.2% of GDP in 2022, from 11% in 2012.
High interest rates also affect lower amounts of cash in circulation, Laboure writes. But now, geopolitical moves and decisions are producing high inflation, which tends to have the opposite effect.
So it’s not all good news for the “war on cash warriors”: “Despite the trend toward a cashless society and CBDCs’ progression,” the bank official warns, “the end of cash is still far in sight and will still be used as a store of value and means of payment for some time.”
In the meantime, cash and decentralized crypto remain the only way for people to have full control over their assets and preserve their privacy.