The usage of cash has been in notable decline, but the Swiss clearly remain attached to it. Two initiatives aim at preventing the disappearance of cash. Above all, private investors fear the loss of freedoms and of the private property notion.
Will cash end up disappearing completely? Its death keeps being announced, but there is resistance in the Swiss population, including private investors. What is certain is that its use is eroding over time with generational change. And the trend has been accelerating since the Covid pandemic.
In 2022, only 36% of transactions in Switzerland were settled in physical cash, versus 43% in 2020 and 70% in 2017, according to a poll released by the Swiss national bank (SNB) in June 2023. On the other hand, the use of credit cards and apps has been rising.
But things are not smooth. Part of the population is worried about the disappearance of physical money. In a 2020 poll by the SNB, cash remained the preferred means of payment of the Swiss population. Of course, the elderly are clearly weighing on the result. Many Swiss people keep physical 1000-franc notes in coffers, for instance. These high denominations represent 58% of the value of all bank notes issued, but very few of them are circulating, which means that a good part ends up «under the mattresses», so to speak, in case of hard times.
At the other end of the spectrum, the younger generations are the ones pushing in the cashless direction. The problem is that the more people decide not to use cash, the more it drives up the unit costs of money logistics for the SNB. Some businesses are already banning cash. For instance, the Wiesner Gastronomie restaurants have stopped accepting physical money since the end of this summer. Other establishments might take the plunge in the near future.
This issue has a political and societal dimension, as a cashless economy would exclude many who still depend on physical money. It would also stifle freedoms, according to the Swiss Freedom Movement (SFM), which fears a complete digitization of society. This movement has launched two popular initiatives in order to anchor cash in the Swiss Constitution. The 62-year-old president of the SFM, Richard Koller, is a computer engineer from Bern. He wants to prevent the full disappearance of cash, and a decline of individual freedoms.
The first initiative of the SFM («Bargeld ist Freiheit») got more than 160’000 signatures in February and demands that physical cash supply be guaranteed at all times. The Federal Council just announced it was launching a consultation for a counter-project on August 30. Obviously, Bern considers that the initiative has good chances to be accepted by the Swiss voters.
The government’s aim is to avoid introducing in the Constitution the wording of the initiative, which is deemed imprecise. Instead, it wants to transfer into the Constitution the dispositions and guarantees that already exist in two federal laws, thus showing it recognizes the importance of cash for society.
The other initiative, launched in March of this year by the same SFM, goes further. It points out that an increasing number of events and festivals promote themselves as «cashless» and «cashfree», and wants to make it mandatory for public events, transports, and retailers to accept cash and not force people to pay by card or Twint. It goes by the name «Wer mit Bargeld bezahlen will, muss mit Bargeld bezahlen können!».
Again, it is obvious that this is not just about technology or payment methods, but about societal choices and aspirations. People wanting to pay in cash, according to this initiative, should not be discriminated against, and the withdrawal of cash should be made easy and accessible at enough ATM points in Switzerland. Cash is also the best backup system we have, it is argued, in case of power outage, or credit card networks are down, or systems are hacked.
Independently of future voting results, the benefit of those initiatives is that it allows a public debate on the meaning of cash to people. Otherwise, the evolution would be so incremental that cash would just fade away, with no democratic debate taking place.
Transaction costs are another consideration. «If credit card payments became the only authorized method, we would transfer 3% of Swiss GDP to the financial system in the form of commissions», according to Jean-Pierre Diserens, general secretary of the Convention of Independent Financial Advisors (CIFA), an organization whose mission is to defend private investors.
In the final analysis, total traceability and state control are what some private investors fear the most. Such a society would go counter to what many view as a healthy democracy guaranteeing individual freedoms, privacy and private property. Beyond the risks of a nosy state are those of a confiscatory state, believes Diserens. Negative interest rates, he believes, have been another form of taxation of savings, and this made banknotes kept at home a better option than savings accounts.
Now full digitization carries the risks of a loss of freedom and of increasing legal restrictions on individual uses of private savings that can go as far as confiscation, as has already been seen throughout previous epochs. «In my view, abolishing cash would be akin to abolishing private property», concludes Diserens. A radical view indeed. Yet a complete end of physical cash could be just as radical.