During 2013, an aspiring Swedish bank robber was told he had selected a “cash-free” location. Sadly leaving with nothing, he asked a teller, “Where else can I go?” Because more than half the bank offices in Sweden were cashless, his chance of finding a bank with money was not good.
One of the first European countries to print paper money 350 years ago, Sweden is now a leader in eliminating it. Two years ago, the volume of their cash retail transactions was down to 20%. One reason is technology. Even giving money to a friend is easy. You just need the Swish app and a phone number.
The U.S. though is not nearly as cashless.
A Restaurant Chain
Sweetgreen is a U.S. restaurant chain that has phased out cash at six of its 48 locations. Obviously happy to eliminate the hassle of cash, Sweetgreen said they had increased hourly transactions by 5% to 15% and diminished robberies. On the other hand, their customers might miss the anonymity, security (no hacking) and financial reality check that cash provides.
Looking beyond one restaurant chain, we would actually see Federal Reserve statistics showing more cash in circulation. Although the numbers (below) cover the entire world, they also reflect continuing cash use in the U.S.:
A Boston Fed report that was published on July 30th tells us we still like cash. Exceeded only by debit card use, cash is a common form of payment:
However, we can see that the use of cash has recently trended downward:
Our Bottom Line: The Money Supply
To be defined as money, a commodity just needs to be a unit of value, a medium of exchange and a store of value. So yes, cows and sea shells can be money. But now in the U.S., we are primarily referring to cash, demand deposits (checking accounts) and savings accounts, and more items like money market accounts when we talk about the money supply.
Showing that we care about our cash, the recent Hamilton/$10 bill battle might mean that cash will be a major money supply component for awhile.
My sources and more: Always interesting, Wired explained why Sweden is increasingly cashless while the NY Times conveyed a good example of the cashless trend in the U.S. through Sweetgreen and this overview. The perfect source though was this Boston Fed Report.