Is a Cashless Society Problematic?

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The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict a cashless society in the future. This paper considers the implications of the abandonment of the use of cash in the future. More specifically, we look at a variety of ways in which the emergence of a cashless society could affect key concerns of a central bank, including seigniorage, monetary policy, payments and financial stability considerations. We find that a cashless society would not generally cause material, system-wide problems. There are a few areas, however, where concerns could emerge: the maintenance of both operational reliability and contestability in retail payments, and the provision of a safe store of value in an (extreme) financial crisis. We note policy options to address these potential concerns.