Rising expectation of ‘cashless’ societies worldwide: a second annual report by the Economist Intelligence Unit (EIU), shows growing acceptance of digital currencies, accelerated by covid-19

• Consumers are increasingly adopting cashless
  payment methods while governments are stepping up planning or piloting of
  central bank digital currencies (CBDCs) and companies are experimenting with
  accepting open-source digital currencies, such as Bitcoin, for treasury or
  portfolio allocation.
• A cashless trend was already strong,
  according to the previous year’s research but in 2021, covid-19 prompted more
  movement away from physical cash. In 2020, only about 72% of respondents said
  that their country was likely to become a cashless society; that grew to over
  81% this year. Meanwhile, the percent of respondents believing their country
  would never become cashless, saw a stark drop from 28% to 19%.
• While transaction settlement is a main
  function of any currency, digital or otherwise, the institutional investor and
  corporate treasurer respondents in the EIU research appear to be using digital
  currencies more as a store of value with a deflationary hedge than purely as a
  settlement option.
• About 76% of corporate treasury and
  institutional investor executives say covid-19 accelerated demand for, and
  adoption of, digital currencies.
• The concept of a digital currency playing a
  role as a “digital gold” asset in corporate treasuries or institutional
  investor portfolios is gaining acceptance among executives.

HONG
KONG SAR – Media
OutReach – 27 May 2021 – In 2020, the Economist
Intelligence Unit conducted a survey to measure the relative acceptance of
digital currencies and other digital payment methods, finding that a cashless
trend was strong with consumers globally. In February and March of 2021, a new
survey set out to gauge how sentiment has changed in the past year. Results
from this year indicate favour for both digital transactions and currencies has
risen further.

Over
the past 12 months, 27% of survey respondents report that they always (as close
to 100% of purchases as possible) use digital payments instead of physical
banknotes, coins or credit cards versus 22% in the previous year’s study.
Examining the metric from the opposite angle—those reporting only very rare use
of digital payment options—the rate declined from 14% to 12%, indicating a
shrinking holdout for physical cash. Further details on comparative annual
results, along with the 2020 survey, can be found at Digimentality 2021, commissioned by crypto.com. 

While
there are a variety of ways people can transact digitally—including smartphone
apps or digital currencies—the most common form of digital currency consumers
recognise is the open-source variety, typically called a cryptocurrency—such as
Bitcoin. Cryptocurrencies remain the most commonly known form of digital
currency options; more than half (55%) of consumers in the 2021 survey say they
are aware of them even if they have never owned or used one. Despite increased
media coverage of CBDCs recently, it was still the least recognized form of
digital currency.     

The
covid-19 crisis has contributed to digital currency awareness, with about half
of the consumer respondents agreeing that the pandemic has heightened the use
case for a cryptocurrency.     

The
pandemic had an even more marked influence on institutional and corporate executives,
who were tested in a supplementary survey during the same time period; about
76% of executives say covid-19 has accelerated demand for and adoption of
digital currencies.    

The
executive survey had deeper questions on how digital currencies play a role in
either corporate treasuries or institutional investor portfolios. While a
majority of respondents classified a digital currency as something that should
be used primarily for transactional purposes (ie settling payments), the most
common commercial uses presently appear to be for capital appreciation and
asset diversification.          

A
key finding in the report, which includes interviews with Henri Arslanian,
PwC’s crypto lead, and Mathew McDermott, managing director and global head of
digital assets for Goldman Sachs, is corporate and institutional support for
the concept of a digital currency playing a role similar to gold in a
portfolio. As a notional “digital gold”, cryptocurrencies can hold similar
patterns in terms of limited supply, being authenticatable and dividable, and
providing a level of diversity in asset allocation and value storage. However,
regulatory, trust and technological-understanding concerns linger.

Jason
Wincuinas, the Economist Intelligence Unit editor who spearheaded the report
said: “Money is rapidly evolving. Only a few years ago there seemed to be very
little commercial or popular support for even the idea of a digital currency
and within the past year, we’ve seen several governments announce new plans to
create digital versions of their currencies. It’s like a new space race on that
level. At the same time, we’ve seen interest and trust in cryptocurrencies grow
among consumers. Now that we’ve added perspective from some of money’s heaviest
users—corporate treasuries and institutional investors—we have a more
comprehensive view of how digital currencies might evolve. Sentiment on the
institutional side of the scale already seems much higher than expected.”        

More
detail on how institutional investors and corporate treasurers use or expect to
use different forms of digital currencies can be found in the full report, as
well as year-over-year comparisons on consumer sentiment.

Visit digitalcurrency.economist.com for the full
report.