In today’s world of payments, systems are far more fragile than we allow ourselves to believe. When digital networks fail, as they may under extreme strain, the only payment instrument that continues to function without electricity, connectivity or authentication servers is the one many are eager to discard: physical cash.
The argument for preserving cash is not about resisting digitalisation or romanticising banknotes. It is about acknowledging that cash plays a systemic role that no digital instrument – no matter how sophisticated – can replicate. Cash is the last line of defence. Its continued availability and usability should be viewed as a central pillar of economic resilience.
The age of permacrisis
This era is characterised by a confluence of crises that interact and intensify one another. Climate-related disasters – from wildfires to floods to heatwaves – increasingly disrupt power grids, telecommunications infrastructure and transportation networks. Cyberattacks, once the province of fringe actors, now represent a core dimension of geopolitical conflict, targeting hospitals, government institutions and financial services with alarming regularity. And wars have returned to the world’s economic centre, affecting energy markets, telecommunications lines and global trade.
Against this backdrop, digital payments remain deeply vulnerable. The 2025 blackout on the Iberian Peninsula offered a glimpse of what can go wrong. When the power grid collapsed and telecommunications faltered, entire regions found themselves suddenly cut off from the digital economy. Payment cards did not work. Mobile wallets froze. Online banking was inaccessible. Merchants could not connect to networks. People with ample digital balances were unable to purchase food or fuel. Only those who carried physical banknotes retained economic agency.
The Covid-19 pandemic demonstrated another phenomenon: when uncertainty spikes, demand for physical cash soars, even in societies where cash usage has been declining. The European Central Bank has observed a dramatic increase in banknote circulation, driven not by transactional need but by precautionary motives. Households sought tangible security. As International Monetary Fund evidence shows, societies are using less cash for payments but hold more for non-transactional motives – precautionary, illicit or simply protective.
CBDCs fail where cash survives
Central bank digital currencies promise to modernise public money. Many jurisdictions are developing CBDCs to enhance payment efficiency, strengthen monetary sovereignty and ensure continued public access to central bank money in a digital age. But CBDCs, for all their benefits, remain inherently digital instruments. They depend on secure hardware, operating systems, cryptographic protocols, periodic synchronisation with central ledgers and ultimately on a functioning network infrastructure.
Offline CBDC functionality allows for short-term transactions without continuous connectivity. But this capability has strict boundaries. It relies on trusted modules embedded in mobile devices or smart cards, which must eventually reconnect and synchronise with the central ledger. If devices fail – software is compromised, batteries cannot be charged or networks remain unavailable for extended periods – offline CBDCs cannot continue operating indefinitely.
Longer outages, regional blackouts, large-scale cyberattacks, severe telecommunications disruptions or systemic cloud failures would affect CBDCs much as they affect all digital instruments. In the scenarios that matter most, CBDCs do not replace cash. They need the same infrastructure that is often the first to fail.
Cash, by contrast, does not need authentication servers or electricity. It does not rely on devices or operating systems. It does not fail when telecommunications networks are compromised. Its resilience is structural, not engineered.
This resilience also has social dimensions. Cash ensures that the elderly, the digitally excluded, unbanked communities, informal workers and those concerned about privacy remain able to participate in the economy. It anchors trust at a time when trust is increasingly scarce. And it remains universally understood.
Never trust a single payment rail
A well-designed monetary ecosystem contains multiple layers that complement each other. Private digital payments provide speed and convenience. CBDCs may provide a modern, stable form of public digital money. But only cash provides a non-digital layer that can sustain economic activity during severe disruptions. It is the monetary equivalent of an emergency generator.
Some central banks recognise this. The ECB has reinforced its commitment to maintaining banknotes for as long as citizens wish to use them. Sweden, often cited as a model of digital transformation, has enacted legislation to guarantee national access to cash, recognising that digitalisation, while beneficial, must not compromise resilience. And the Reserve Bank of New Zealand has stated clearly that it will ensure cash remains available ‘for as long as people value and use it’, recognising the role of physical currency in a country exposed to earthquakes, storms and network outages.
These policy choices reflect an understanding that a payment system with only digital rails is not a payment system that can withstand systemic shocks. Yet these examples remain the exception. Many central banks have not yet recognised that the disappearance of cash would expose their economies to severe resilience risks.
The oversight blind spot
Despite its importance, cash does not currently sit within the core of payment-system oversight. Central banks issue banknotes, run cash centres, ensure quality standards and manage anti-counterfeiting measures. While these activities are crucial for the logistics of currency operations, they often overlook the strategic governance of cash as a vital resilience asset. Emphasising its strategic management would enhance the resilience and reliability of cash within the payment ecosystem.
Payment-system oversight departments focus on digital financial market infrastructures: real-time gross settlement systems, securities settlement systems, central counterparties and associated payment networks, including for retail transactions. Their work is guided by the Bank for International Settlements’ Principles for Financial Market Infrastructures, the global benchmark for FMI regulation and oversight.
The PFMI address governance, liquidity, credit risk, default management, cyber resilience, operational continuity and the role of critical service providers. Yet they do not address cash. This is not an oversight flaw; it reflects their purpose. The PFMI were built for digital FMIs, not for physical currency. However, even the PFMI acknowledge that FMIs must retain the ability to revert to manual, non-automated procedures in extreme circumstances.
The world has changed in ways that make this principle even more relevant. Cash is the only payment component that functions when all FMIs are impaired. Yet it is not managed with the same strategic lens that informs digital oversight. There is no comprehensive framework ensuring its availability or usability during crises, no systematic monitoring of cash access points from a strategic standpoint and no integrated resilience planning that treats cash distribution as part of national disaster response. As digitalisation accelerates, this oversight gap only widens.
To protect the resilience of the entire payment system, this gap must close.
Treat cash as critical infrastructure
What is needed now is a strategic cash policy – a formal recognition that cash is not simply a legacy payment method, but a component of national critical infrastructure. A strategic cash policy would define how a central bank ensures that cash remains available, accessible and usable even under extreme conditions.
This kind of policy would require central banks to think about cash not only in operational terms but in systemic ones. It would integrate cash distribution into crisis planning and ensure a minimum infrastructure of ATM networks, cash-in/cash-out points and retailer acceptance frameworks. It would involve collaboration with governments, emergency agencies and private actors to guarantee continuity during disasters.
The vision of a cashless future is a vision of a future that works perfectly – as long as everything else works perfectly. But in the world we inhabit, a payment system that depends entirely on digital infrastructure becomes unusable precisely when society needs it most.
With thanks to Tanai Khiaonarong.
Biagio Bossone is an adviser to international financial institutions and national central banks.
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