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Leonid Bershidsky

Why Cold, Hard Cash Remains King

Love for paper money is simply stronger than the ease of credit cards and apps.
Cash rules.

Cash rules.

Photographer: Sam Yeh/AFP/Getty Images

We don't have to like the way technology is changing the world. Given the technological disruption that's happening everywhere, it's reasonable to expect a little Luddite pushback. The growing share of cash in advanced economies might fall in that category.

Economists rarely admit they don't understand something related to their area of expertise. But Daniel Gros, director of the Center for European Policy Studies, a Brussels think tank, did so in a fresh paper for the European Parliament. He called the increasing cash-to-economic output ratios a "mystery." Isn't cash supposed to be going obsolete with all the modern payment methods, from debit and credit cards to the latest fintech apps? Well, it's not, except in Sweden and Denmark, where conscious efforts are being made to create cashless societies. Here is Gros's chart showing the increasing share of cash: