Cash, long a refuge in uncertain times, now under suspicion
Article written by Zeina Karam in AP:
BEIRUT (AP) — In
troubled times, people have been known to hoard currency at home — a
financial security blanket against deep uncertainty. But in this crisis,
things are different. This time cash itself, passed from hand to hand
across neighborhoods, cities and societies just like the coronavirus, is
a source of suspicion rather than reassurance.
No
longer a thing to be shoved mindlessly into a pocket, tucked into a
worn wallet or thrown casually on a kitchen counter, money’s status has
changed during the virus era — perhaps irrevocably. The pandemic has
also reawakened debate about the continued viability of what has been
the physical lifeblood of global economies: paper money and coins.
From the supermarkets of the United States and Japan to the shantytowns of Africa to the gas stations of Tehran, a growing number of businesses and individuals worldwide have stopped using banknotes in fear that physical currency, handled by tens of thousands of people over their useful life, could be a vector for the spreading coronavirus.
Public
officials and health experts have said that the risk of transferring
the virus from person to person through the use of money is minimal.
That hasn’t stopped businesses from refusing to accept currency, and
some countries from urging citizens to stop using banknotes altogether.
In
the midst of the coronavirus era, a thousand calculations are made
before cash is handled — mostly with gloved hands. Some leave the money
laid out on surfaces for days, for the virus to die. Others disinfect
banknotes with spray. Some even microwave them in the belief it kills
the virus. In China, banks are now required to sterilize cash with
ultraviolet light or heat, then store notes for at least a week before
they are given to customers.
“In
many areas, cash was already beginning to disappear due the increased
risk of robbery, the ease of internet ordering, and the ubiquity of cell
phones,” says Zachary Cohle, an assistant professor at the department
of economics at Quinnipiac University in Connecticut.
“Cash,” Cohle says, “now carries an extra stigma.”
But is ditching cash altogether even feasible?
Sweden,
Finland, Norway, Canada and others have slowly phased out cash to the
point where using it in large amounts seems suspicious. The United
Kingdom and Australia are among countries expected to become cashless
societies. And in China, use of cash by consumers has plunged as
smartphone-based payment services rose in popularity over the past
decade.
But for much of the rest of the world, letting go of cash is difficult if not impossible.
`CASH IST FESCH!′
Humans have a centuries-old emotional relationship with physical money that is difficult to erase.
“Currency
represents value that we can hold in our hands. Cash provides a way for
us to translate a day’s work into something tangible and easily
traded,” Cohle says. “We may not know what goods we will need in the
future. However, holding money allows for us to feel as though we can
buy whatever goods we will need.”
“Cash
ist Fesch” is a common saying in Austria and southern Germany. The
phrase, which literally means cash is beautiful, reflects both
countries’ attachment to cash — and not just among the older generation
or those who worry about the loss of privacy that comes with cashless
payments, but also among some younger people who see it as a status
symbol.
“I
always pay with cash — as a matter of principle!” Ingel Strobl, a
76-year-old pensioner, says while shopping at a bakery in central
Vienna. “I know they want to abolish cash. But I don’t want that we lose
our right to our own money. You know what I mean anyway! I stick to
cash — corona or not.”’
Since
the virus outbreak, however, shops that have remained open, like
grocery stores, have posted signs encouraging people to pay with cards.
Many are: According to Germany’s central bank, the Bundesbank, 43% of
people have changed their payment behavior in the past few weeks; now, a
large percentage are likely to make contactless payments with a card.
Japan,
for its sophisticated reputation, is also a solid believer in cash,
which makes up for 53% of a household’s assets, according to the Bank of
Japan. The belief in “cash is king” reigns, though the country has had
zero interest rates for two decades, far longer than the rest of the
developed world.
But
the threat of the coronavirus could be the impetus the nation needed to
move toward going cashless, said Hiroki Maruyama, who heads the Fintech
Association of Japan, a nonprofit that supports innovation in financial
services.
“The culture,” he says, “is slowly changing.”
CASH IN A CRISIS
“Cash combined with courage in a crisis is priceless,” billionaire investor Warren Buffett says.
In
crisis-hit countries and parts of the world gripped by conflict or
inflation, cash is still carried in thick wads for simple shopping
expeditions.
In Lebanon, as the economic situation deteriorated late last year and the fear of banks collapsing mounted,
many people began saving cash in their homes. The sale of home safes
surged. An estimated $3 billion was withdrawn and stashed at home,
according to the governor of the country’s Central Bank.
As
banks imposed capital controls, trips to the bank to withdraw foreign
currency — followed by a trip to one of the ubiquitous exchange shops to
change money on the black market — became the norm for many Lebanese.
“All
I do is handle cash all day,” said one money changer in Beirut, who
insisted on being identified by his first name, Ihsan. He said he feared
unwanted attention from authorities.
“I
wear gloves. But honestly? Corona is the last thing on people’s minds
right now,” Ihsan said. “All they’re thinking about is how to handle
this crisis and get money to live.”
In Iran, one of the world’s worst coronavirus hotspots,
there are no international bank cards, like Visa or Mastercard, because
of U.S. sanctions. Many were surprised at the new banners that appeared
at some gas stations in Tehran: “Service is only for those who will pay
by debit cards.”
In Venezuela, it is common to see bolivars littering the streets because the local currency has lost its value.
“The
truth is that I haven’t had any bolivars in my wallet for a long time,”
said Fátima Figueras, a 32-year-old office worker, waiting in line to
enter a Caracas pharmacy. “What worries me most is having to hand my
debit card to a cashier who touches it,” said Figueras, wearing a
facemask against the coronavirus.
Cash
still rules in West and Central Africa even with the growth in regional
banking options and mobile money service providers. Monthly banking
account fees are prohibitive for many, and the self-employed often keep
their savings at home in hard currency. ATM machines often don’t work.
Dorothy Harpool,
director of student and community initiatives and lecturer at Wichita
State University’s W. Frank Barton School of Business, predicted the
pandemic would lead some consumers to rethink their use of cash. But
going completely cashless, she says, is a long way off.
“Until
everyone and every country has reliable access to the internet, I do
not believe the pandemic will singularly change past practices,” Harpool
said. In particular, cash transactions are also likely to remain for
businesses operating under the radar of government and other regulatory
bodies.
Ihsan,
the Beirut money changer, said there are certain things you just can’t
do without cash — particularly in a dysfunctional and developing nation.
“Like how else can you bribe a government employee to get your business done? With a credit card?”
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