Institute for Money, Technology & Financial Inclusion

As financial transactions are increasingly digitized, old and new kinds of intermediaries are only expanding in importance. Intermediaries, mediators and brokers sit at critical junctures and operate between diverse financial arenas and pathways. We argue that mapping the intermediate entails identifying how different kinds of actors—human and non-human, objects and interfaces, institutions and practices—delimit or reify but also stitch together and overcome spatial and temporal differences in people's financial lives, while taking on varying burdens of risk. Mapping the intermediate is both an empirical and methodological exercise. Empirically, it requires following the agents and traders, brokers and material objects that facilitate transactions and add, extract, or re-work different kinds of value. Methodologically, intermediaries and the intermediate are not only the objects of analysis but act as analytical tools in their own right, making the process and politics of transactions visible and tangible. Attending to the intermediate in our inquiries around money, currency and new digital financial technologies, thereby, offers new directions for grounding finance in politics and history and better connecting micro and macro and local and global economic processes.

This white paper by Dr. Ursula Dalinghaus, Visiting Professor of Anthropology at Ripon College and affiliated scholar at the Institute for Money, Technology & Financial Inclusion (IMTFI) University of California, takes a close look at the role of cash in society and the specific characteristics making it a public good, citing relevant studies, scholars and field experiments.

"Cash in circulation is growing on a global scale by approximately 3% per year; 80% of all payments worldwide are cash transactions. Cash is an essential part of every stable financial and economic system", stated ICA Chairman Wolfram Seidemann. "This paper demonstrates that cash is more than just a means of payment. It is a public good, part of modern life and vital for people's everyday lives."

Key takeaways

Cash is a public good that guarantees ease of use, accessibility, privacy, and many other unique qualities in local, national, and global monetary systems. Cash fulfills both criteria for a public good: it is non-excludable because its function as a means of payment, of transfer of value, works without compensation. And it is non-rivalrous because its use by one person does not preclude its use by another.

Cash is public – the only form of money not controlled by a private, profit-driven entity. Once in circulation, it is the only form of payment independent of its issuer. It is deployed not to make a profit on its transfer but to support and sustain value transfers free of charge. There may be costs associated with cash, but cash itself is a means of value transfer that settles at face value with no fees involved.

Cash enables personal freedom and self-determination – state-issued physical cash is a distributed public infrastructure that allows citizens and users to create a space outside the state. At the same time, cash acts as a claim upon central banks and, ultimately, states to ensure good governance of monetary and payment systems.

The materiality of cash is vital to many social practices. The role cash plays in social relationships often hinges on the physical design of cash, such as denomination, which makes cash particularly useful for budgeting, accounting, gifting, or saving.

Introduction to Money at the Margins. Book description: Mobile money, e-commerce, cash cards, retail credit cards, and more—as new monetary technologies become increasingly available, the global South has cautiously embraced these mediums as a potential solution to the issue of financial inclusion. How, if at all, do new forms of dematerialized money impact people’s everyday financial lives? In what way do technologies interact with financial repertoires and other socio-cultural institutions? How do these technologies of financial inclusion shape the global politics and geographies of difference and inequality? These questions are at the heart of Money at the Margins, a groundbreaking exploration of the uses and socio-cultural impact of new forms of money and financial services.

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade." 

This is post 5 of 6 of the PERSPECTIVES blog series on Financial Inclusion: 1. Can Financial Inclusion Be Synonymous with Financial Justice and Equity; 2. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part One): Decolonizing Financial Inclusion; 3. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part Two): Decolonizing Financial Inclusion; 4. Drama in the Payments Infrastructure and Saturation in Financial Education: Discussing New Avenues of Research around Financial Inclusion in Colombia; 5. Continuing the Conversation about “Financial Inclusions” in Latin America – onto Mexico; 6. Mobile Money: The First Decade - NEW White paper.

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade." 

This is post 1 of 6 of the PERSPECTIVES blog series on Financial Inclusion: 1. Can Financial Inclusion Be Synonymous with Financial Justice and Equity; 2. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part One): Decolonizing Financial Inclusion; 3. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part Two): Decolonizing Financial Inclusion; 4. Drama in the Payments Infrastructure and Saturation in Financial Education: Discussing New Avenues of Research around Financial Inclusion in Colombia; 5. Continuing the Conversation about “Financial Inclusions” in Latin America – onto Mexico; 6. Mobile Money: The First Decade - NEW White paper.

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade." 

This is post 3 of 6 of the PERSPECTIVES blog series on Financial Inclusion: 1. Can Financial Inclusion Be Synonymous with Financial Justice and Equity; 2. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part One): Decolonizing Financial Inclusion; 3. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part Two): Decolonizing Financial Inclusion; 4. Drama in the Payments Infrastructure and Saturation in Financial Education: Discussing New Avenues of Research around Financial Inclusion in Colombia; 5. Continuing the Conversation about “Financial Inclusions” in Latin America – onto Mexico; 6. Mobile Money: The First Decade - NEW White paper.

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade." 

This is post 2 of 6 of the PERSPECTIVES blog series on Financial Inclusion: 1. Can Financial Inclusion Be Synonymous with Financial Justice and Equity; 2. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part One): Decolonizing Financial Inclusion; 3. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part Two): Decolonizing Financial Inclusion; 4. Drama in the Payments Infrastructure and Saturation in Financial Education: Discussing New Avenues of Research around Financial Inclusion in Colombia; 5. Continuing the Conversation about “Financial Inclusions” in Latin America – onto Mexico; 6. Mobile Money: The First Decade - NEW White paper.

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade."

This is post 1 of 6 of the PERSPECTIVES blog series on Financial Inclusion: 1. Can Financial Inclusion Be Synonymous with Financial Justice and Equity; 2. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part One): Decolonizing Financial Inclusion; 3. Reflections on the “Financial Inclusion of the Poor,” Workshop in Karachi (Part Two): Decolonizing Financial Inclusion; 4. Drama in the Payments Infrastructure and Saturation in Financial Education: Discussing New Avenues of Research around Financial Inclusion in Colombia; 5. Continuing the Conversation about “Financial Inclusions” in Latin America – onto Mexico; 6. Mobile Money: The First Decade - NEW White paper.

Over the last decade there has been a revolution in payment technologies. Digitization of bank accounts, new digital payment applications, and an array of new kinds of financial products and services have opened up a wide range of choices for storing, saving, sending, and receiving money. Digital finance has become an important tool in efforts to facilitate formalfinancial inclusion across the globe.

And yet, cash has also remained an essential tool for people’s financial practices and lives alongside these new payment forms. Evidence from both developing and developed payment markets shows that while digital payments may have increased exponentially, the demand for physical banknotes and coins has kept up with the pace of digital finance. Physical currency or physical accounting devices are ancient and crosscultural technologies, in continuous use since at least 1600 B.C. Aside from risks and benefits, they are wedded to an incredibly durable set of behaviors and social practices.

People use diverse payment methods (from cash, to cards, to payment applications and other alternatives) together. However, the ability to move between diverse payment forms, especially cash, has also featured prominently in criminal activities, including money laundering, tax evasion, and terrorist financing. This has led government authorities, law enforcement, and other entities to target cash in particular as the supposed core method – and problem – in such activities. The European Commission proposes to institute a cash transaction limit across the EU, claiming that it will prevent money laundering, terrorism, and crime. This follows the decision by the European Central Bank to end issuance of the 500 euro note beginning in 2018.

In IMTFI's PERSPECTIVES blog series, IMTFI fellows take on the recent demonetization move in India through 7 posts on the IMTFI Blog from January-February 2017. This synthesis serves as a collation of the 7 blogposts.

The series aims to foster an open dialogue on issues around money, technology and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events - based on their research and areas of expertise. The topic of demonetization will conclude with a curated commentary by IMTFI on key themes, important questions, and what we can learn from these contributions for digital financial inclusion going forward.

#1 - Demonetization and its Discontents (1/24/2017) by Janaki Srinivasan

#2 - The Recent Indian Demonetisation and Cash Exclusion (1/26/2017) by Debashis Acharya

#3 - The Dangerous Liaisons between Demonetization and the Indian Informal Economy (Part 1) (1/30/2017) by Isabelle Guérin, Santosh Kumar and G Venkatasubramanian

#4 - The Dangerous Liaisons between Demonetization and the Indian Informal Economy (Part 2) (2/13/2017) by Isabelle Guéin, Santosh Kumar and G Venkatasubramanian

#5 - The Recent Indian Demonetization and Cash Exclusion (Part 2) (2/1/2017) by Debashis Acharya, V V Subbarao, and T K Venkatachalapathy

#6 - Before Money isn't Money Anymore....(2/7/2017) by Vivian Dzokoto

#7 - Insights, Challenges, and Ways Forward (2/22/2017) by Ursula Dalinghaus, Nima Lamu Yolmo, and Janaki Srinivasan