Trade Finance TV: Bye-bye cash? The future of money

Clarissa Dann: As the COVID 19 pandemic accelerates the shift to digital payments, what does this really mean for the future of money as we know it? Will cash disappear? Will we see the first tray consignment being settled with Bitcoin? Marion Laboure is here to explain some of her research findings and tell us a bit more about how attitudes to cash are changing.

Welcome, Marion.

Marion Laboure: Thank you, Clarissa.

To come back on your first point, will cash disappear? That’s a big question. Everyone is asking this question, and the short answer would be not at all. In a research we have surveyed over 3600 people and 60% of people think that cash will stay forever. And what was super interesting is like it was true before the pandemic and it’s true now as well. Cash is definitely increasing as a store of value and has been doubling over the past 20 years.

However, if we look at cash as a means of payment, we have a long term trend where cash is declining. And when we talk about cryptocurrency, the market research over the last 18 months said in market cap as surging. Bitcoin currency is over $1 trillion. The total market cap of all cryptocurrencies is nearly over 2 trillion. To answer your question about is it going to be a payment between five and 8% of the population, depending on countries have already transacted in Bitcoin. So this is pretty low. And part of the reason is because fees are quite high compared to other means of payment.

Number of transactions that you can do in one second is also pretty low. But if we look, for example, at El Salvador, where Bitcoin has just become legal tender, they are using the Lightning Network. So fees are pretty low and transactions are much higher. So we are moving in that direction and regulation is coming as well, which is a big thing because when regulation would be there, I would expect more corporates to buy, to sell to other cryptocurrencies, more consumers as well. And if we have more consumers, more copyrights, it also means that we have higher liquidity, so lower volatility.

Clarissa Dann: The central banks have been watching all this rather avidly, haven’t they, coming up with their own solution? Where are we with the CPDCs and how much traction are they gathering?

Marion Laboure: I met a lot of clients over the past two years and I would say that two years ago no one was asking about CPDC. A year ago, people were looking at this in a very skeptical way, especially when China started launching the pilot. And these days we can see from the Bank of International settlement, nearly 90% of central banks are working on the CPDC, 13% are conducting pilot CPDC. It’s already live Eastern Caribbean. It’s very likely to be live during the window at the games in China. So the question is no longer whether or not it’s going to be live but when?

Clarissa Dann: And of course, that raises additional questions about monetary policy and the control central banks have over the money supply generally. But that’s for another show. Marion Laboure, thank you very much for joining me on Trade Finance TV.

Marion Laboure: Thank you very much, Clarissa.

Clarissa Dann: I’m Clarissa Dann, your presenter of Trade Finance TV. Thank you for watching.

Published on December 14, 2021