The End of Cash

Written by
Trevor Koverko
Published on
March 1, 2022

The old saying “cash is king” may soon be entirely obsolete, according to experts. The future of money is digital, according to a recent CNBC article.

The pandemic caused mass acceleration of certain sectors, and the shift toward contactless and digital payments during shutdowns has, in turn, led to greater acceptance of cash alternatives–namely cryptocurrency, economist Eswar Prasad told CNBC Make It.

“For many consumers and businesses that made the switch to digital payments, there is probably no going back, even if the pandemic-related concerns about the tactile nature of cash were to recede,” said Prasad, author, senior professor of trade policy at Cornell University, senior fellow at the Brookings Institution and the former head of International Monetary Fund’s China division.

He spelled out the shift simply: “The era of cash is drawing to an end and that of central bank digital currencies has begun.” His prediction of the future of money includes a combination of cryptocurrency, stablecoins, central bank digital currencies (CBDCs) and other forms of digital payment that will ultimately lead to the “demise of [physical] cash.”

Still, he believes that no single technology will be able to overtake it. He does not believe cryptocurrencies can do it by themselves and while stablecoins do have a better chance, he believes they have limited reach. As for CBDC, they would need to be easily and widely available.

Central bank digital currencies

Central bank digital currencies (CBDCs) are digital forms of central bank-issued money. Backed by a central bank, they represent money that is a direct liability of the central bank. Several central banks are in the early stages of experimenting with CBDCs, including China, Japan, Sweden and Nigeria, while the Bank of England and the European Central Bank are preparing for trials. The Bahamas produced the world’s first CBDC, called the sand dollar, according to Prasad.

While the U.S. Federal Reserve appears reluctant to begin the potential development of a CBDC, chair Jerome Powell has said the central bank is thoroughly researching the possibility.

“The technology behind each CBDC depends on the preferences of the country and its central bank,” according to the article. “In some cases, CBDCs are run on distributed ledger technology, which is a type of database that can store multiple copies of financial records, like transaction history, across multiple entities. These entities can be managed overall by a central bank.”

This presents a major difference between CBDC and cryptocurrencies like bitcoin: CBDCs would be controlled by one entity – a central bank, which is why CBDC would not be considered a cryptocurrency.

This could produce pros and cons, according to Prasad: it would provide the poor and unbanked easy access to a digital payment system and basic banking services, but those perks could be met with a loss of privacy.


Stablecoins are cryptocurrencies that are meant to be affixed to a reserve asset, like gold or the U.S. dollar, but are not issued by a central bank. Stablecoins could be good for business in that they provide low-cost and easily accessible digital payments across national borders, Prasad explained.

“In fact, the Biden administration recently told Congress that when regulated, stablecoins could ‘support faster, more efficient and more inclusive payment options,’” according to the article.

Still, stablecoins caught the attention of U.S. lawmakers who claim they are a possible threat to financial stability, hence why Biden’s economic advisors recommended that Congress pass legislation to limit stablecoin issuance to only insured banks. This move, if accomplished, would give U.S. regulators greater jurisdiction over the industry and could make stablecoins more viable. Prasad also notes that the more prevalent use of stablecoins for exchange could also help the poor, unbanked and small businesses.


Cryptocurrencies should help make payment systems more efficient. Since traditional cryptocurrencies like bitcoin are decentralised, their value is usually derived from supply and demand.

“Bitcoin, for example, launched in 2009 with the intent to work as a peer-to-peer financial system. Its blockchain was carefully created and has a well-thought-out ecosystem,” according to the article. “Bitcoin also has a limited supply, which allows for built-in scarcity by design. Because of that, it’s seen as a store of value by its holders.”

Payments can be facilitated via quick and transparent financial transactions, even across borders. The current volatility of some cryptocurrencies does present some challenges.

The democratisation of finance will open doors that had previously been closed to the world’s poorest populations. The system still will not be perfect, according to Prasad, and education will be essential for the economically marginalised who lack financial literacy and digital access so that they can embrace opportunities in cryptocurrency.

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