Swiss Central Bank: cash will live for many years

The Swiss central bank sought on Monday to allay fears among citizens that bank notes could eventually be phased out as a result of global money-laundering rules or the rise of alternative payments systems.

Among other benefits over cashless payments, cash provides "more effective budget control" and can be used without any technical know-how, while it also offers a comprehensive protection with regard to financial privacy, SNB's deputy head Fritz Zurbruegg said.

It has been speculated for some time that Switzerland may have to do away with cash, especially high value banknotes, to get rid of its tag of being an alleged 'safe haven' for black money stashed by foreigners.

A number of policy measures have been put in place by Swiss authorities in the recent years to address concerns of its banks providing high secrecy walls around their global clients. New rules make it much easier for several foreign jurisdictions to get details from Switzerland about people suspected to be involved in tax evasion and other financial crimes.
Addressing the World Banknote Summit in Basel on Monday, Zurbruegg said they have no plans to do away with cash. "The last few months and years have witnessed a growing debate on the future of cash. Its critics say that cash should be abolished, or that cashless alternatives will in any case gradually render it obsolete. However, to paraphrase Mark Twain: Reports of the death of cash have been greatly exaggerated," the Swiss central bank's deputy head said.

By fulfilling both tasks, the SNB lays the groundwork for the public to choose its preferred method of payment for each individual transaction.

"Yet this freedom of choice between payment methods exists only if the public has confidence in both cashless payments and cash. Prerequisites for public confidence in cash are, first, a monetary policy which is geared towards stability and ensures that banknotes and coins retain their value over the long term."

"Second, banknotes need to be of the highest quality and have the best possible protection against counterfeiting", he underlined.

"In many countries, the value of cash in circulation relative to GDP has increased over the last few years, a development that can be attributed to occasional periods of heightened uncertainty about the stability of banks in the wake of the financial crisis. Another factor is the low level of interest rates on transaction accounts, and hence the low opportunity cost of holding cash," he added.