Speaking to CNBC, author and economist Eswar Prasad said the pandemic has not only accelerated the shift toward digital and contactless payments, but also led to a more mainstream acceptance of physical cash alternatives, such as cryptocurrency, that will likely endure.
“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,” said Prasad to CNBC, 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.”
Among the cash alternatives, Prasad names stablecoins, central bank currencies (CBDC) and other digital payment systems, but warns that no one advance will displace cash.
“Cryptocurrencies by themselves won’t. Stablecoins have a better shot, but might have limited reach,” Prasad explained. A CBDC would need to be “widely and easily accessible.”
Though there are infinite ways the future of money can evolve, Prasad predicts the combination of cryptocurrency, stablecoins, CBDCs and other digital payment systems will lead to the “demise of [physical] cash.”