LONDON: Even though more people now use cards, mobile phones or even facial recognition technology to pay street performers, buy pizza or donate to church on Sundays, hard cash is showing no signs of dying out, central bankers said. The Bank for International Settlements (BIS) said cryptocurrencies and the debate around them – such as whether cash will be replaced by virtual substitutes – are part of a broader debate about the nature of money. The payments sector has argued that the use of cash is falling and therefore they don’t need to provide as many ATM machines or bank branches. But in the BIS’ latest quarterly review, researchers took a closer look at whether cash is becoming a relic of the past as some claim. “Some of the breathless commentary gives the impression that cash in the form of traditional notes and coins is going out of fashion fast,” said Hyun Song Shin, BIS economic adviser and head of research said. “Despite all the technological improvements in payments in recent years, the use of good old-fashioned cash is still rising in most, though not all, advanced and emerging market economies.” Cash in circulation has actually risen in recent years, from 7 percent of GDP in 2000 to 9 percent in 2016, although it has fallen in Sweden and a few other places. “The resilience of cash as a social institution reminds us of the importance of understanding the economic functions of money, beyond just the innovations in technology,” Shin said. Still, debit and credit card payments are rising as well, from 13 percent of GDP in 2000 to 25 percent in 2016. People hold more cards and are using them for more and smaller transactions, Shin said. Policy NormaliSation: The recent volatility in global financial markets should not deter top central banks from lifting interest rates or ending years of unprecedented stimulus, the Bank for International Settlements said on Sunday. The latest report from the Switzerland-based group said that after such a long period of calm there were bound to be more market wobbles and that trade war worries were making the “delicate task” of trying to normalize policy more complicated. Nevertheless, the move toward higher interest rates, which started in the United States and is gradually gaining traction elsewhere, should continue. “Treading the path (of policy normalization) will call for a great deal of skill, judgment and, yes, also a measure of good fortune,” said Claudio Borio, the head of the BIS’ monetary and economic department. “But policymakers need not fear volatility as such. Along the normalization path, some volatility can be their friend.” The BIS is an umbrella group for the world’s central banks so its reports are seen as an indicator of the thinking that goes on behind the closed doors of its quarterly meetings. It dissected the recent market correction which wiped trillions of dollars off the value of global stocks. It put it down to strong US growth and wage inflation data which triggered anxiety about faster interest rate rises. Published in Daily Times, March 13th 2018.