COVID-19 Accelerates Cashless Society

A report was done by the Economist Intelligence Unit in February and March of this year, which states that people are favouring digital transactions and currencies, pushing for a cashless society.

This is the second annual report by EIU, with 2020’s report showing the same strong trend. COVID-19 has prompted more progress towards cashless, last year only about 72% said they think their country will go cashless, this year it grew to 81%.

The people who felt their country would not become cashless fell from 28% to 19%. The report shows consumers are adopting cashless payments and governments are planning to use central bank digital currencies (CBDC).

They also stated Companies are experimenting with open-source digital currencies, like Bitcoin for ‘treasury or portfolio allocation’. Around 76% of corporate treasury and institutional investor executives said COVID-19 has increased the usage of digital currencies.

27% of respondents say they always use digital payments instead of cash, coins or credit cards, up from 22% last year. People said they rarely or never use digital payments fell from 14% to 12%.

Cashless Society and Crypto

Bitcoin and other cryptocurrencies are the most commonly known digital currency options with 55% of respondents saying they know of it even if they have not used/own any. The report also notes despite the increased media coverage, CBDC’s are the least known digital currency.

Around half of people surveyed said they feel COVID-19 pushed the use of digital currencies like crypto. Of the institutional and corporate executives asked for a supplementary survey in the same time frame as the original, 76% said the pandemic accelerated demand for digital currencies.

The supplementary survey included deeper questioning on digital currencies in the corporate sphere, most responded that digital currencies as something to be used for transactional purposes. This is usually for settling payments etc, the most common commercial uses seem to be for capital appreciation and asset diversification.

One other aspect is the idea of “digital gold”, in which cryptocurrencies can hold similar patterns in terms of limited supply, being authenticable and dividable, and allowing for further diversity in asset allocation and value storage. One thing still holding this notion back is regulation, trust, and technological literacy being a barrier to some.

Jason Wincuinas, the Economist Intelligence Unit editor who lead the report said, “Money is rapidly evolving. Only a few years ago there seemed to be very little commercial or popular support for even the idea of a digital currency and within the past year, we’ve seen several governments announce new plans to create digital versions of their currencies. It’s like a new space race on that level. At the same time, we’ve seen interest and trust in cryptocurrencies grow among consumers. Now that we’ve added perspective from some of money’s heaviest users—corporate treasuries and institutional investors—we have a more comprehensive view of how digital currencies might evolve. Sentiment on the institutional side of the scale already seems much higher than expected.”