Rising expectation of ‘cashless’ societies worldwide: a second annual report by the Economist Intelligence Unit (EIU), shows growing acceptance of digital currencies, accelerated by covid-19

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  • Consumers are increasingly adopting cashless payment methods while governments are stepping up planning or piloting of central bank digital currencies (CBDCs) and companies are experimenting with accepting open-source digital currencies, such as Bitcoin, for treasury or portfolio allocation.
  • A cashless trend was already strong, according to the previous year’s research but in 2021, covid-19 prompted more movement away from physical cash. In 2020, only about 72% of respondents said that their country was likely to become a cashless society; that grew to over 81% this year. Meanwhile, the percent of respondents believing their country would never become cashless, saw a stark drop from 28% to 19%.
  • While transaction settlement is a main function of any currency, digital or otherwise, the institutional investor and corporate treasurer respondents in the EIU research appear to be using digital currencies more as a store of value with a deflationary hedge than purely as a settlement option.
  • About 76% of corporate treasury and institutional investor executives say covid-19 accelerated demand for, and adoption of, digital currencies.
  • The concept of a digital currency playing a role as a “digital gold” asset in corporate treasuries or institutional investor portfolios is gaining acceptance among executives.

HONG KONG SAR – Media OutReach – 27 May 2021 – In 2020, the Economist Intelligence Unit conducted a survey to measure the relative acceptance of digital currencies and other digital payment methods, finding that a cashless trend was strong with consumers globally. In February and March of 2021, a new survey set out to gauge how sentiment has changed in the past year. Results from this year indicate favour for both digital transactions and currencies has risen further.

Over the past 12 months, 27% of survey respondents report that they always (as close to 100% of purchases as possible) use digital payments instead of physical banknotes, coins or credit cards versus 22% in the previous year’s study. Examining the metric from the opposite angle—those reporting only very rare use of digital payment options—the rate declined from 14% to 12%, indicating a shrinking holdout for physical cash. Further details on comparative annual results, along with the 2020 survey, can be found at Digimentality 2021, commissioned by crypto.com.

While there are a variety of ways people can transact digitally—including smartphone apps or digital currencies—the most common form of digital currency consumers recognise is the open-source variety, typically called a cryptocurrency—such as Bitcoin. Cryptocurrencies remain the most commonly known form of digital currency options; more than half (55%) of consumers in the 2021 survey say they are aware of them even if they have never owned or used one. Despite increased media coverage of CBDCs recently, it was still the least recognized form of digital currency.                                   

The covid-19 crisis has contributed to digital currency awareness, with about half of the consumer respondents agreeing that the pandemic has heightened the use case for a cryptocurrency.

The pandemic had an even more marked influence on institutional and corporate executives, who were tested in a supplementary survey during the same time period; about 76% of executives say covid-19 has accelerated demand for and adoption of digital currencies.

The executive survey had deeper questions on how digital currencies play a role in either corporate treasuries or institutional investor portfolios. While a majority of respondents classified a digital currency as something that should be used primarily for transactional purposes (ie settling payments), the most common commercial uses presently appear to be for capital appreciation and asset diversification.

A key finding in the report, which includes interviews with Henri Arslanian, PwC’s crypto lead, and Mathew McDermott, managing director and global head of digital assets for Goldman Sachs, is corporate and institutional support for the concept of a digital currency playing a role similar to gold in a portfolio. As a notional “digital gold”, cryptocurrencies can hold similar patterns in terms of limited supply, being authenticatable and dividable, and providing a level of diversity in asset allocation and value storage. However, regulatory, trust and technological-understanding concerns linger.

Jason Wincuinas, the Economist Intelligence Unit editor who spearheaded the report said: “Money is rapidly evolving. Only a few years ago there seemed to be very little commercial or popular support for even the idea of a digital currency and within the past year, we’ve seen several governments announce new plans to create digital versions of their currencies. It’s like a new space race on that level. At the same time, we’ve seen interest and trust in cryptocurrencies grow among consumers. Now that we’ve added perspective from some of money’s heaviest users—corporate treasuries and institutional investors—we have a more comprehensive view of how digital currencies might evolve. Sentiment on the institutional side of the scale already seems much higher than expected.”

More detail on how institutional investors and corporate treasurers use or expect to use different forms of digital currencies can be found in the full report, as well as year-over-year comparisons on consumer sentiment.

Visit digitalcurrency.economist.com for the full report.

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