Pros and cons of cash: The state of the debate

Abstract

This study investigates the benefits and disadvantages of cash in a general context. First, we explicitly address the arguments of cash critics, who are calling for cash to be abolished altogether. Second, we show that cash plays a crucial role in the current two-tier banking system. Third, we are discussing selected benefits of cash, inter alia its use in financial crises and the provision of privacy. We conclude that the abolition of cash would have major drawbacks and could entail undesirable and unintended consequences.