Study Notes
Cash - Will it Survive? (Financial Economics)
- Level:
- GCSE, AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 4 Apr 2018
Will technological advance in the financial sector fast forward the use of cash as a medium of exchange? In December 2016 the total value of notes in circulation in the UK surpassed £70bn for the first time. This is equivalent to £1100 for every person in the UK.
- Globally there are over 500 billion banknotes in circulation and cash accounts for 85% of transactions
- In 2015, cash accounted for less than half of UK consumer payments for the first time. Technology is allowing us to make transactions drawing on our bank deposits e.g. contactless payments
- But technology makes cash more secure e.g. authenticity of notes
Cash still has important advantages for users:
- Immediately acceptable and immediately certain that a transaction is complete
- Useful as a contingency e.g. when online systems fail
- Cheaper for businesses to process e.g. vs debit & credit cards
- Remains a store of value if inflation is low and when confidence in the banking system is fragile
- Strong demand for cash in the shadow economy 6.Rising levels of self employment also supporting use of cash
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