Cleviston Haynes: Cash will remain a part of the mix
Speech by Mr Cleviston Haynes, Governor of the Central Bank of Barbados, Bridgetown, 4 June
2019.
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Just over a decade ago the Bank hosted its first currency exhibition, as ensuring a steady supply
of money in circulation is a natural extension of one of our core functions.
Thirteen years later, much has changed. For some, the assertion that "cash is king" has been
replaced by the question "is cash dead?"
In many ways this is not surprising. Alternatives to cash are increasingly popular. Credit cards,
debit cards, mobile wallets, etc., appear to be displacing traditional payment instruments such as
cheques and cash. Globally, smartphone apps and other technological advances seem poised to
transform payment systems as we know them.
Now, for the younger persons here today, the idea of paying for something using your phone
probably doesn't seem extraordinary, but this is something I certainly did not imagine when we
were your age.
Nevertheless, the Bank understands the need to adapt in general. More specifically, we have to
adapt to the requirements of the new digital age. Being able to collect and make payments more
efficiently is a key part of the digital transformation that the economy will undergo. It has the
potential to enhance productivity and overall competitiveness. We are committed to working with
Government to improve the payments infrastructure, including through the reduced use of
cheques and cash. This should contribute to speedier, secure settlement of transactions.
So why an exhibition celebrating cash?
While we aim to decrease significantly the use of cash, we cannot ignore that at present it
accounts for a significant percentage of the transactions made in Barbados. Currency in
circulation is about 7% of GDP. However, there is already increasing usage of credit and debit
cards the transactions through the Automated Clearing House.
While cash remains relevant now, it is facing increased competition as an instrument for
payments.
But we believe that there will remain a place for cash. A wholesale shift to digital payments or
even debit and credit cards has implications for financial inclusion. For the traditionally unbanked,
access to cash allows participation in the economy. The same is true of many older persons and
other vulnerable members of society.
Cash also serves as a backup in the event that the networks that power other forms of payment
go down during and after a natural disaster or due to technological glitches or security breaches.
The importance of retaining some level of cash is widely acknowledged, even by countries like
Sweden, which is leading the world in the adoption of alternative forms of payment. Indeed, in his
presentation at our Domestic Financial Institutions Conference earlier this year, Sweden's
Deputy Central Bank Governor, Henry Ohlsson, discussed the merits of cash, citing both the
need to protect the financially marginalised and the privacy that paying with cash affords.
Deputy Governor Ohlsson is not alone recognising the benefits of cash even while supporting the
development and adoption of electronic payments.
A 2019 study by the UK government found that despite debit cards replacing cash as the most
popular payment method in that country, there is still substantial support for retaining some level
of physical currency.
It is clear then, that there is a degree of consensus internationally on this issue.
In the decade or so since the Bank hosted its first currency exhibition, we've seen increased use
of credit and debit cards, a significant reduction in the use of cheques, and the introduction of
digital and cryptocurrencies.
So we acknowledge and encourage the changes to the payments landscape. But at the same
time, it would be premature to write cash's obituary. In the future, as we seek to increase
efficiency through the use of electronic payments, cash may no longer be king, but it will remain
a part of the mix.
I thank you.