Depending on who you ask, cash will not remain king.
The Covid-19 pandemic not only accelerated the shift toward digital and contactless payments, but also led to a more mainstream acceptance of physical cash alternatives like cryptocurrency that will likely stay, economist Eswar Prasad tells 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,” says Prasad, author of “The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance.”
Prasad, a senior professor of trade policy at Cornell University, a senior fellow at the Brookings Institution and the former head of the International Monetary Fund’s China division, says that “the era of cash is drawing to an end and that of central bank digital currencies has begun.”
Though there are infinite ways the future of money can evolve, Prasad predicts the combination of cryptocurrency, stablecoins, central bank digital currencies (CBDCs) and other digital payment systems will lead to the “demise of [physical] cash.”
However, he emphasizes that one technology alone won’t overtake it. “Cryptocurrencies by themselves won’t. Stablecoins have a better shot, but might have limited reach,” he explains. A CBDC would need to be “widely and easily accessible.”
Here’s what to know about each.
Central bank digital currencies (CBDCs)
A CBDC is a digital form of central bank-issued money. Those in trials are backed by a