Is a Cashless Society Achievable?

Abstract

Given increasing physical cash in circulation in many areas, a cashless society is likely not achievable soon for most countries. However, there are certain countries, particularly the Nordics, where the rise of digital payments is accompanied by a decrease in physical cash. While consumer preferences may drive towards a near-cashless society in these countries, a fully cashless society is not possible without first addressing several obstacles. First, a credible technical solution would need to exist as a substitute for physical cash, given the risks to consumers of strictly holding money with defaultable private sector institutions. Second, laws and regulations regarding the use of physical cash would have to change. We discuss high-level designs for how a retail-facing central bank-issued digital currency (CBDC) could be built on R3’s Corda and evaluate legal changes in Norway.