Cashlessness without backup systems places financial systems at risk
As the use of non-cash payment mechanisms continued to increase over the course of 2018, Europe's central banks began warning that phasing out cash poses a serious threat to the financial system, as too-heavy reliance on digital payments exposes countries to the potential for catastrophic failure due to IT failures, energy blackouts, and hacker attacks. In addition, regulators warned that a cashless world alienates vulnerable members of society such as elderly and disabled people. The level of cashlessness varies across the EU. Sweden was the leader, with cash only accounting for 13% of payments in stores and half of all bank branches no longer handling cash, though a court ruled that public entities must continue to accept cash. In Estonia, the Netherlands, and Finland electronic payments already accounted for about half of all transactions. Across the entire eurozone, however, cash still accounted for almost 80% of payments. The warnings were partly inspired by a June 2018 failure of Visa's payment services, which exposed the lack of a backup system.
Writer: Lauren Cerulus and Cat Contiguglia