Politique Internationale — The sanitary crisis is likely to be with us for a long time and, with it, a worsening of the economic crisis. Among the consequences of this crisis, should we fear a challenge to the role of cash in transactions?
Wolfram Seidemann — The facts are eloquent: consumer trust in cash is enormous. It was already so before the beginning of the pandemic; it is even more so after several months with expenditure in cash that is growing almost everywhere in the world. Did we realise that 80 per cent of transactions in salespoints over the surface of the globe were effected with notes and coins? It is perhaps modish to evoke the scheduled end of cash — the debate is not new — but this thesis is contradicted by reality. Of course, a certain number of financial establishments have changed their way of functioning — less oriented to fiduciary cash — but the fundamentals in favour of the sustained use of cash are firmly established.
P. I. — In this context where cash is standing up well, are the International Currency Association’s missions unchanged or are they undergoing readjustments?
W. S. — The International Currency Association was founded in 2016 with the aim of giving companies specialised in the manufacture of cash — coins and notes — a real representational organisation. For the members of this association, it is ideal for exchanging views over the problematics facing the sector and for interacting with interested parties, of which the community of central banks are also a part. Our aim consists of ensuring that the consumer, wherever he is in the world, can continue to pay in cash if he so wishes. This is a right that we consider to be unfailing and for which States’ policies must be scrutinised and encouraged. Let’s remember that cash is a public asset in the sense that it permits us to live freely while guaranteeing the protection of private life. These are stakes for which it is important to remain mobilised. ICA members are first and foremost rooted in the United States, Canada, Japan, Australia and Europe. Insofar as these companies are active in the four corners of the planet, the issues they handle are without any exaggeration universal.
P. I. — Nonetheless, the ICA’s composition could give the impression that the banknotes manufacturing market is dominated by a handful of countries …
W. S. — There are two things to take into account: on the one hand, the production chain such as it now exists across the world; on the other, the weight of history. On the first point, the sector is much more widely spread than before; in fact, central banks of the whole world are associated with the manufacture of notes and they work with a number of operators. As for history, its trajectory was drawn in such a way that Europe became one of the pioneers of our industry. In the matter of securitisation of operations, the continent, with the United States and Australia, found itself at the forefront. The creation of the ICA reflects this given but, since then, our perimeter of action has moved greatly across the initial frontiers.
P. I. — As we know, there are several monetary zones: the dollar zone, the euro zone, the Swiss franc zone… When a member of your association works for a country in one zone, does this make it easier to work with another country of the same zone?
W. S. — This geopolitical logic is not the one that mainly guides operators’ choices. For a central bank, the launch of a note is not part of a trial of strength. The mark of sovereignty and expression of identity are the two pillars of its reflection. That is why the design of the note is so important: this is talked about too little, but the power of evocation that a note spreads through its image is strong. A banknote is an element of civilisation. It must convey something.
P. I. — To come back to the sanitary crisis, did you feel that your sector of activity was weakened by events? How would you qualify its capacity to react?
W. S. — Our sector was marked by its very great robustness. As proof, no country suffered a break in its supply chain in coins and notes. That means that all the links in this chain held firm despite strong shocks. For example, our industry had, just like others, to take drastic measures to protect employees. This implies constraints in working environments, but there was no choice. The strict restrictions imposed on travelling led us to develop new ways of cooperation, to find adapted, alternative solutions. We are a branch of activity that is particularly resilient and that proves this every day.
P. I. — You talk of a good capacity for resilience. And yet, fears of the transmission of the virus through fiduciary currency are coming to the surface…
W. S. — The least we can say is that we were not let off the hook! We had, in effect, to face a serious disinformation campaign. The consequences are all the more damaging because many observers, such as the media, and actors such as retailers, fell into the trap of these malevolent accusations. Happily, it seems to me that things are getting back into place little by little and the truth is now clearly established: that cash is a perfectly sure means of payment, sufficiently clean and with extremely little risk of contamination. Our industry is without danger for the consumer and those who might still doubt can refer to the statements of the competent authorities. They will be perfectly reassured. But more than long speeches, the terrain speaks for itself: since the beginning of the crisis, cash withdrawals have increased throughout the world and in significant proportions.
P. I. — When an association federates several members, experience shows that it is often difficult to speak with a single voice. What do you do to set out common positions?
W. S. — Our members are not made in the same mould. Mostly, they are affected to different types of activity. Some are specialised in the production of banknotes, others of coins, and yet others work on security procedures. And I am not even talking about those actors who are devoted to paper and inks… Without forgetting those multifunctioning companies, on some segments or on the totality of the chain of currency. I am not being exhaustive: to draw up a complete list of our trades and their representatives would take up a bit more time. This rich and varied panorama does not stop us sharing common positions because we are all driven by the same desire and it is a strong one: that of explaining the advantages of cash, to promote its use and guarantee its largest possible access. On a daily basis, we can rely on an executive committee and on a secretariat to pass on our positions and favour concertation.
P. I. — Faced with the current upheavals — observers talk of a world afterwards — does this mean that the “world of before” is finished for cash and that we shall have to break with a certain normality?
W. S. — It is difficult to define the word “normal” today given that means of payment are a universe in constant transformation between the choices of the population, innovations or even the greater and greater access to consumer goods and services. Fiduciary cash has never been in the rearguard. On the contrary, its representatives, to whom I belong, consider the progress of technology to be an excellent thing: it is normal that the digital revolution should lead to the increased possibility of buying products and of obtaining services. We are opposed neither to progress nor to change and even less to their translation into everyday life. All these means of payment can coexist. Cash is becoming even more important faced with the dependency and risks linked to digital means of payments and retains its importance in protecting consumers’ private lives and individual liberty. On the other hand, for all the reasons mentioned, it seems to us indispensable to guarantee the continuity of access to cash. Its use carries great advantages for the consumer and we must ensure the maintenance of this system. Today as yesterday, but especially as tomorrow, there is no question of marginalising cash.
P. I. — You talk of transformations. These are often the result of innovations. Are research and development as dynamic for cash as for other means of payment?
W. S. — Innovation in cash manifests itself at several levels. The development of ways to combat forgery, which we shall come back to, is an important element. To resume the progress accomplished, we can say that we are protected for the coming three generations. Innovation is also confirmed in the means of access to cash. For a long time, counters and distributors were the two main supply sources for the consumer. They remain the leaders but other intermediaries make for a precious network, such as supermarkets with a growing number of chains where money can be withdrawn. In the United States, this system also involves small shops. The keystone in innovative steps lies in the capacity to put cash at the disposition of the greatest number possible, including in geographically remote zones or in those affected by poverty.
P. I. — Where are you in terms of securitisation? Has fraud diminished significantly?
W. S. — The struggle against forgery is a long-term affair. Among ICA members, several fight counterfeit money on a daily basis. The missions are numerous: it is a matter of conceiving the most efficient products and solutions against forgers and to make them operational. Our members also work closely with central banks to identify risks and define the procedures that will be the most rigorous. It is clear that forgery is diminishing in intensity. This means that our efforts are paying off in the wake of the different innovations. Securitisation is an ultra-technological domain in which our members have invested enormously to the extent that fraud is today less present in the cash sector than in that of electronic payments.
P. I. — The climate emergency has become an inescapable horizon for industrialists. In the case of cash, the argument by which electronic means of payment would be the most virtuous is often put forward. What do you reply? Is fiduciary cash the bad student in the struggle against warming?
W. S. — Who said our industrialists were not committed in favour of the climate? Before listing the steps put in place, it’s time to put an end to some preconceptions. Until proven otherwise, notes are only produced once with an ecological imprint that is fixed from the beginning and that never moves. A contrario, electronic payments which are repeated indefinitely require considerable energy needs. Then, we are already a sustainable industry: 80 per cent of the raw material that serves to make notes comes from cotton waste. Once taken out of circulation, those same notes undergo recycling procedures that have been carefully drawn up. With time, the life expectancy of notes has grown in great proportions. Each of these stages — from production to going into circulation — is testament to responsible functioning. For several years, the climate emergency has been on the agenda of the work of the ICA and its members. We have even formalised this objective by adopting a sustainable development charter. Whether this involves good practices to put into action, more virtuous technological innovations or ecological footprint indicators, we have the tools to progress.
P. I. — Listening to you, fiduciary cash is every bit as good as the most responsible branches of activity …
W. S. — Because this is the reality. The thesis of two opposing industries on one side, electronic payments elevated to an ecological mode and, on the other, a cash activity that shows little respect for the environment — does not hold up. We know how to produce quickly and with controlled costs: this dual dimension that is ours is also an efficient barrier against the production of CO2.
P. I. — By definition, all the States that use banknotes are not driven by the same democratic reflexes. Don’t the representatives of your industry find it difficult to work with some of them?
W. S. — Firstly and above all, we have to ask who, as a priority, benefits from fiduciary cash? The answer is simple: the population which uses it every day to try and live in the best way possible. I am not saying that geopolitical arguments are useless but, before starting a discourse on this, let’s start by observing daily life: cash is essential for societies to stay on the move. The way of functioning of cash means that our companies’ interlocutors are central banks. From the moment that these banks are recognised by the World Bank and that the countries they are from are represented at the United Nations, there is no brake on work with the States.
P. I. — We can measure the intensity of the ICA’s problematics. Finally, is it a lobby like any other?
W. S. — We support cash. This approach implies recurrent exchanges with the authorities and regulators of the whole world without forgetting, of course, central banks. We are also in contact with civil society, the media and the public at large. Within this framework, we have messages to convey with the ambition that they will get a wide echo. The question of terminology comes later, but I prefer to see us as a group that promotes the use of cash.