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Cash is dead. Who is the new king?

We have no idea where most of the cash actually is.

So cash is dying a slow death.

It was on its way out before Covid, but Covid really took things down a notch.

(I couldn’t even pay with cash at my local op-shop! The napkin holders cost 50c Glenda!)

Australia is actually leading the charge out of cash. Physical cash now accounts for only one in four retail transactions.

And that’s down from 70% in 2007. It’s an incredibly rapid change.

And the banks are adjusting – if you call closing down branches and ripping out ATMs ‘adjusting’.

APRA data shows that in the 20/21 financial year, 447 branches – or 9% of the branch network closed down.

That’s substantial, but it’s worse for ATMs. Over the same period, 1864, or a full 19 per cent of the network were ripped out.

ATMs are now down 44% over the past five years.

At this rate, they won’t last the decade.

But will anyone mind?

People just don’t want as much cash as they used to. The Australian Banking Association reckons demand for cash was down 20 per cent in the year to August 2021, after falling 16 per cent the year before.

It’s on the way out.

But you know the funny thing. While cash is used less and less in transactions, demand for cash is booming.

Central banks are making more and more of it. And not just the digital money that’s forms Quantitative Easing. We’re talking cold hard currency.

Central Bankers call it the “Paradox of Banknotes”.

And where’s it all going? That’s the million dollar question.

In Europe, the European Central bank concluded that only around a fifth of banknotes in circulation were being used in recorded sales and purchases.

The rest (the are careful not to spell out explicitly), is probably funding organised crime.

In fact, the Britain’s National Crime Agency analysed how many banknotes are printed, how many are used in recorded transactions and the size of the local criminal economy.

It has concluded that so much cash was leaving the country each year, that the only way it could be done was on the back of massive trucks!

Madness.

Think about that for a sec. Four fifths (or 80%) of cash is being used to fund the black market.

Ordinary people need it less and less…

How long before it’s just outlawed?

Money is the middle of a massive disruption right now.

Yes, crypto is on the block, but there’s some massive forces changing the way we engage with cash in a fundamental way.

Into that space comes Bitcoin and the boys. A lot of people have said that Bitcoin is used to fund illicit activity. Well, 80% of cash is too, so I’m not sure it’s such a useful metric.

But money is changing.

A new reality is emerging.

What we’re using to pay for things on the other side is still anybody’s guess.

But if you get on the right side of this shift, you could make a fortune.

DB.

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