In this episode of The Cash News, Tom Meehan, CFI and Shaun Ferrari discuss some of the latest news in the currency world, including whether businesses can choose not to accept cash, El Salvador’s experiment with Bitcoin as legal tender and security concerns about cryptocurrency usage in Afghanistan.
In many countries, including the United States, businesses are legally required to accept cash as tender. However, widespread misinformation about cash and coin transmitting the virus that causes COVID-19 has led many businesses to refuse to accept cash transactions. Most of these businesses are restaurants and retail merchants trying to protect their employees from unnecessary contact with customers and surfaces.
For example, a June 2020 survey by the European Central Bank on the coronavirus pandemic’s impact on cash trends across EU countries found that one-quarter of French respondents said they experienced having a cash payment refused. Although French businesses are well within their right to encourage card or contactless payments, they cannot legally refuse to accept cash unless the notes are in very poor condition, a payment uses more than 50 coins or they are unable to provide change. In 2019, cash was still the most common payment method in France, adding up to 59 percent of transactions. However, the same survey found that by June 2020, 39 percent of French participants were using cash less often while 49 percent chose contactless payments more frequently.
Although cash isn’t the cleanest item you might handle in your everyday life, multiple studies have shown that cash and coins do not transmit the coronavirus. People should be more concerned about high-contact non-porous materials like plastic and metal, where the coronavirus can survive for hours or even days. In comparison, cash is often made of textured materials like linen or cotton, where viruses do not last long. Simply put: cash is no less of a COVID-19 risk than your cell phone.
Earlier in September 2021, El Salvador became the first country to accept Bitcoin as legal tender, in addition to the U.S. dollar. On September 7, 2021, the first day of Bitcoin’s new status in El Salvador, the federal government acquired approximately $21 million worth of bitcoin in an effort to boost the cryptocurrency market and reassure Salvadorans that Bitcoin was safe and reliable.
However, that same day Bitcoin fell 11 percent while smartphone users found themselves unable to download Chivo, an official government-run digital wallet app. Tom noted that although it’s exciting to see a government really commit to cryptocurrency like this, El Salvador’s unstable government and economy won’t make it easy for Bitcoin to succeed.
Tom and Shaun also discussed recent security concerns around the growing use of cryptocurrency in Afghanistan, which shows the classic double-edged sword of cryptocurrency. After the Taliban took control of the government of Afghanistan earlier this year in August, they also shut down the official banking system of Afghanistan, cutting off traditional access to the economy. To fund their activities, the Taliban typically uses an underground global network of informal lenders and back-room bankers called hawala. However, crypto has superseded hawala as the go-to payment method for the Taliban, thanks to its speed and ease of use.
Although there are many concerns about cryptocurrency being used for illegal purposes or to fund terrorist activity, it is also a possible solution for a country that just had its banking system shut down, cutting off people’s access to their own money. In comparison, cryptocurrency like Bitcoin is completely separate from the government, so citizens can still have access to their money during political instability.
For more about the latest news in currency today, listen to this episode of The Cash News.