This week in Say More, PS talks with Marion Laboure, a lecturer at Harvard University, a senior economist at Deutsche Bank Research, and the author of Democratizing Finance: The Radical Promise of Fintech.
Project Syndicate: In March 2020, you, Juergen Braunstein, and Sachin Silva predicted that the COVID-19 pandemic would “accelerate an ongoing shift among younger populations toward digital payments,” though Asia would move faster than the West. In your new book Democratizing Finance: The Radical Promise of Fintech, you and Nicolas Deffrennes note that while many people – particularly in the West – still want cash, new means of payment are nonetheless emerging. Which new means of payment are gaining traction in societies enamored of cash, and why? Has economic uncertainty, stemming from, say, the US-China decoupling or the Ukraine war, affected the shift?
Marion Laboure: We have to distinguish between cash as a store of value and cash as a means of payment.
As a store of value, cash has not lost its position just yet. In the United States, Europe, and Japan, cash in circulation has nearly doubled over the last 20 years, and it reached a new high during the pandemic, driven mostly by large banknotes. This is due to people withdrawing cash, which they view as “a safe heaven” to store value, especially during crises.