Switzerland’s cash-obsessed citizens are falling out of love with physical money. Some 36% of consumer transactions were settled using physical money last year, according to a Swiss National Bank (SNB) survey published on Thursday.
That compares with 43% in 2020 — when the pandemic was raging, discouraging the use of cash — and 70% in 2017. Another 33% were settled with debit cards, 13% using credit cards and 11% via mobile payment apps.
Cash is an emotive issue in Switzerland, where every inhabitant holds the equivalent of $11,824 in cash, the most in all economies where the Bank for International Settlements collates data.
On top of that, a group called the Swiss Freedom Movement recently collected more than 130,000 signatures for writing the existence of physical money into the constitution. The government decided to back the preemptive move against the spread of digital money, supporting a national vote to change the constitution in this regard.
In total CHF81 billion ($89 billion) worth of bills and coins were in circulation as of March, according to SNB data. A significant part of that may be held outside the country to store value, especially since more than half of the total is in the form of 1000-franc notes, one of the highest-denomination bills of the world.
When the central bank started to raise interest rates last June, the amount of outstanding cash started to decline, but it remains well above the level it was at when borrowing costs dropped below zero.
Somewhat paradoxically, a peer-to-peer payment app called Twint also is increasingly popular in Switzerland — used by 5 million of its 8.7 million inhabitants. That contrasts with the neighboring euro area, which currently lacks a comparatively well established payment app.
While the SNB remains neutral on which payment methods Swiss citizens use, Vice President Martin Schlegel has said that cash use might face a “downward spiral” if more people decide to not use it any more, driving up unit costs of money logistics. “Cash is a well-functioning system, but it is not to be taken for granted,” he said recently.
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The total value of all CHF1,000 ($1,070) notes in circulation was more than CHF35 billion in 2012. Their share in the CHF55 billion total of all Swiss banknotes rose to a record 60 per cent last year from 50 per cent a year earlier. As a comparison, only a third of all euros are circulating…
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