A study of the move to a cashless future and the growing prominence of digital assets. Read survey results from thousands of consumers and hundreds of executives to better understand our global monetary future.
Commissioned by
Digimentality 2022—Fear and favouring of digital currency is a report from Economist Impact, commissioned by Crypto.com, exploring the extent to which digital payments are trusted by consumers and what barriers may exist to basic monetary functions becoming predominantly electronic or digital. The report compares the attitudes of consumers with similar surveys conducted in 2020 and 2021 and adds the perspective of institutional investors and corporate treasurers. Kim Andreasson is the author and Siddharth Poddar is the editor of this report.
A consumer survey of 3,000 people conducted in January and February 2022 provides data for the first part of the report. One-half of the respondents came from developed economies (United States, United Kingdom, France, South Korea, Australia and Singapore) and one-half from developing ones (Brazil, Turkey, Vietnam, South Africa and the Philippines). About seven in ten respondents were between 18 and 41 years old with the remaining aged 42 years or older. Roughly half (53%) were men and the rest women (47%). Various educational backgrounds are represented, with the largest numbers of respondents (about 3 in 4) having a university or professional degree. All respondents had bought a product or service within the past 12 months using some kind of digital payment.
The second part of the report draws from a survey of 150 institutional investors and corporate treasury management respondents conducted in January and February 2022. About a third of respondents are North America-based with the remainder spread across Australia, China, France, Germany, India, Singapore and the UK. All survey takers were familiar with their organisation’s investment decision-making processes.
Complete demographics can be found in the appendix.
The following experts gave their perspectives for the report:
We would like to thank all interviewees and survey respondents for their time and insight.
This report is written based on two surveys conducted in January and February 2022-one of 3,000 consumers and the other of 150 institutional investors and corporate treasury management respondents.
Digital payments—ranging from credit cards and payment apps to cryptocurrencies and central bank digital currencies (CBDCs)—are at a crossroads. In Sweden, the Central Bank 2021 Payments report noted that the use of cash has now fallen below 10% (as measured by the last transaction made).1 The report also noted that the pandemic has spurred the use of digital options – echoing a key finding from the 2021 survey conducted as part of this research program. “There’s a need to move towards a cashless society and I think we saw some of that during the height of the pandemic,” says John Mitchell, CEO and co-founder of Episode Six, a payments company. “The convenience, speed of transactions, inclusion and efficiencies are all reasons for this.”
A wide range of countries are considering the introduction of CBDCs to promote a cashless society. Cryptocurrencies have also been adopted as legal tender in El Salvador and the Central African Republic. At the same time, the move towards digital payments faces challenges. In the consumer survey conducted for this report, there is an uptick in the trust for cash. Many governments have also moved to regulate cryptocurrencies. In Asia, for example, the regulatory landscape is complex and varies from jurisdiction to jurisdiction, and continues to evolve, impacting the use of cryptocurrencies. In the month of April 2022 alone, Australia, China, Hong Kong, India, Singapore and the Philippines saw regulatory developments around crypto assets.2 In the United States, meanwhile, the Secret Service launched a cryptocurrency awareness hub in February 2022 to raise understanding of their usage.3
“The shift towards digital assets requires a shift in technology,” explains Mr Mitchell, whose company provides clients with the ability to put together products that allow their customers to pay with any asset anywhere. “The future is extraordinarily bright.” This seems clear from the survey findings, which indicate there is a better understanding of digital assets and greater optimism around their use.
The use of digital payments from a consumer perspective is also the focus of the first part of this report. It compares the attitudes of consumers with similar surveys conducted in 2020 and 2021 to identify trends to what extent digital payments are trusted by consumers and what barriers remain towards a cashless society. The second part of this report compares the attitudes of institutional investors and corporate treasurers to identify their view of digital payments and assets, and compares the results to a similar survey conducted in 2021.
For the purposes of this report, we use the term “digital payment” to include any and all of the following:
CBDCs are now favoured by 14% of people, a big increase from 4% in 2021. Perhaps as a result, about one-third of consumers expect their government or central bank to launch a CBDC within the next three years (37%) and/or make cryptocurrency legal tender (37%). More than 60 central banks are at different stages of CBDC development with China and Sweden having started live pilots, according to the 2021 CBDC Global Index from PwC, a professional services firm.4
“It’s natural for physical cash to be complemented by digital cash as the world is becoming more digital and it’s a natural evolution,” says Tobias Adrian, financial counsellor and director of the Monetary and Capital Markets Department of the International Monetary Fund (IMF). “It might not be used much but in principle, being possible to convert into central bank digital currency might be an important anchor for the digital economy.”
Meanwhile, the use of physical credit or debit cards has dwindled. Only 8% of consumers say they always use them, compared with about one-third (31%) in 2021 and 26% in 2020. Instead, online banking (22%) is the most preferred digital option among respondents (same as in 2021, and up from 19% a year earlier). The use of cryptocurrencies, such as Bitcoin, Ethereum and Litecoin, among others, remains steady at about 4% of people who always use them (compared with 4% and 5% in recent years).
Cash remains king when it comes to trust. Eight in ten (85%) of respondents consider cash to be trustworthy as a method of payment, slightly up from last year (83%). “Different countries have different cultures,” says Mr Adrian about the hesitation to use digital payments across the world. “Stability and the acceptability as a means of payment, of course, are very important as well.”
In the past 12 months, 24% of survey takers reported that they always used digital payments instead of physical banknotes, coins or credit cards. Another 4 in 10 (36%) said they used digital payments often (at least 50% of their purchases). This is in line with the previous two surveys where the equivalent figures were 27% and 41% respectively (2021) and 22% and 42% (2020).
Cryptocurrencies continue to be the most common form of digital payment (used by 13% of survey takers), followed by a digital currency issued by technology and financial firms (12%), and a government issued digital currency (9%), which is largely similar to year-over-year comparisons. All survey takers had made a payment for a product or service over the past 12 months using any kind of digital payment, with one-half being from developed countries and one-half representing developing countries.
Eighteen percent of respondents say the country in which they live will become cashless (defined as predominantly using digital instead of physical payment methods) in the next year or two, compared with 17% in 2021 and 14% a year earlier. Indicative of this trend, only 13% now say their country will never become cashless compared with one-fifth (19%) in 2021 and one-third (28%) who said the same in 2020. “It’s a societal move to digital everything,” explains Mr Mitchell. “There will be new ways to transact that we aren’t talking about today, and that evolution in payments and finance will continue.”
Among those who believe their country will become cashless, government and the public sector is seen as the biggest influence moving forward (49% compared with 27% in 2021), echoing the finding in the institutional survey that regulations play an increasing role towards acceptance and adoption. Indeed, government regulations (27%) are seen as the main barrier towards their country becoming cashless by survey takers, up from 20% in 2021, while habits with physical cash (23%) has dwindled on the list of obstacles (previously cited by 40%).
“Many bodies that are handling the regulatory concerns might not be up to speed on the technology,” says Mr Mitchell. “And if one doesn’t understand the technology, it will be quite difficult to regulate it in an appropriate, efficient and successful way.” For consumers, the main impacts are practical challenges. It is hard to regulate crypto assets, but Mr Adrian says “what can be regulated are entry points and exit points.”
The biggest barriers towards greater adoption are similar across the different types of digital currencies available with small nuances. For open-source digital currencies (such as but not limited to Bitcoin) the lack of knowledge has plummeted from 51% to 22% year-over-year according to survey takers. Instead, the main obstacle is now viewed as the need for a secure form of digital personal ID, which does not yet exist (cited by 24.3% compared with 13% in 2021).
Greater adoption of CBDCs continues to be hampered by a lack of education (27%), technical literacy (27%), as well as unequal access (27%), the latter which has risen in importance year-over-year (20%).
Corporate-issued digital currencies primarily suffer from a lack of technical literacy (26%), a small increase from 2021 (24%).
Meanwhile, non-fungible tokens (NFTs), are a rising star—trailing only cash—with two-thirds (65%) saying they are trustworthy, supporting the institutional survey finding that companies are increasingly exploring their use. In fact, 60% of survey takers expect to buy, hold, or sell NFTs within the next three years. “We want to be associated with the future,” says Mr. Mitchell. “We’re working on the ability to use NFTs as a payment system [in addition to cryptocurrencies].” An NFT (a piece of art, for instance) can be used for payment by converting the asset into something else, such as the US dollar.
Executives increasingly believe CBDCs are likely to replace physical currency in their country: almost two-thirds (65%) say this will be the case compared with about one-half (56%) last year.
The pace is also predicted to increase. Seven in ten (70%) now say it will happen within a decade, compared to six in ten (58%) a year ago. All survey takers were familiar with their organisation’s investment decision-making process with one-half being institutional investors and one-half representing for profit corporations.
More than nine in ten (93%) now say they agree that issuance of central bank digital currencies (CBDCs) is necessary to establish a functioning market for new financial instruments such as digital bonds or other forms of digital assets, up from eight in ten (78%) a year ago. A significant majority of respondents (82%) say the establishment of CBDCs will increase general demand for other forms of digital currencies and assets that are not government backed. “I would imagine that there’s a coexistence between CBDCs, which is the liability of the central bank, and stablecoins [such as USDC and USDT], which could be backed, for example, by interest-bearing deposits,” says Mr Adrian.
Regulations have become the primary obstacle to greater institutional investor or corporate treasury use of open source digital currencies and are cited by about four in ten (41%) compared with one in three (32%) a year ago. Conversely, market trust or understanding of digital currencies/assets is now considered an obstacle by only 35% of institutions, down from 47% a year ago.
“The private sector is very important in terms of innovating around digital money and I don’t think the central bank should be in the business of necessarily defining the technological frontier of payment systems,” says Mr Adrian. “You don’t want to kill innovation with regulation. But on the other hand, innovation can only have the full amount of trust if it’s well regulated.”
A little over two in three survey takers (68%) say an open source (non-bank) digital currency, where no dedicated intermediary organisation or sovereign government controls supply, presents relatively greater risk as an asset in a portfolio or treasury account as compared to other currency holdings, down from 72% a year earlier.
This is a slight improvement in perception. “There has to be some degree of investor protection and consumer protection,” explains Mr Adrian. “In addition to some degree of disclosure, resilience, identity and integrity to make sure that transactions are conforming to sanctions and the rule of law.”
Wider adoption/acceptance of CBDCs (33%) continues to be the main trigger towards portfolio/treasury activity in open source digital currencies (31% last year). “We’re going to see the adoption of these digital currencies and the creation of CBDCs,” predicts Mr Mitchell. “The improvement of the technology that’s required to support all of this continues to evolve and mature.”
Investors agree there is a need for open source digital currencies (85% compared to 80% last year), CBDCs (86% vs 77%) or corporate-issued digital currencies (88% vs 76%) as a diversifier in a portfolio or treasury account. Additionally, almost nine in ten (87%) respondents believe there is a need for an international institution only digital currency exchange platform (such as with the Bank of International Settlements).
Survey takers are divided about whether open source (non-bank) digital currencies (cryptocurrencies such as but not limited to Bitcoin) should be considered strictly as a currency for settling transactions or as an asset for storing/appreciating value: About four in ten (41%) view it as a regular currency, a rise from 34% last year at the expense of being seen as an asset (23%), down from 31%, while a combination of both (30%) has held fairly steady year-over-year (27%).
The primary roles of open source digital currencies/assets within a portfolio or treasury account have shifted year-over-year with alternative asset diversification (33% vs 31%) moving into first place. Capital appreciation (29% vs 33%) has fallen to the second highest-rated answer together with monetary transfers for large settlements, a hedge against inflation, F/X or currency exchange, and capital appreciation (all 29%). Pure speculation (23% vs 21%) remains among the lowest-selected options, indicating continued maturity in the market.
Almost nine in ten institutional investors and corporate treasury survey takers agree that consumer demand for all digital currencies (CBDC, open source or corporate-issued) has increased in their country over the past three years (87% vs 76%), a significant increase year over-year. This may be intensified by the move to the metaverse, a digital world. Recent reports indicate that Meta, the owner of Facebook, plans to introduce virtual payments, including for NFTs.5 In the survey conducted for this report, NFTs are also seen as an emerging asset class that organisations plan to or currently hold or trade (74%).
“I think the rise of the metaverse and the desire to be able to transact within the metaverse by default will increase demand and will provide a showcase for NFTs,” says Mr. Mitchell. In 2021, the NFT marketplace surpassed US$40bn in transactions 2021.6 “I think it is more speculative as well,” warns Mr. Adrian. “It could be a good investment but it’s generally unpredictable,” and draws the comparison to art as an investment object.
“We accommodate units of value on our platform and allow for the conversions of these units of value to be made whether it is digital first currency or anything that you can ascribe a value to that we can hold, convert and allow,” says Mr Mitchell, illustrating the move towards new assets such as NFTs in the future.
There’s a clear acknowledgement that digital assets have become a global issue that needs to be resolved at the global level, indicated by regulations (or lack thereof) rising to the top of the main barriers towards their use amongst both consumers and investors in the surveys conducted for this report.
“I do think we will have a sound global regulatory framework for crypto assets or service providers to crypto assets,” says Mr Adrian. “We will have central bank digital currencies that are more widespread and I think the payment systems across borders are going to be upgraded in a substantial fashion,” and predicts these three things will happen over the next five years.
Access the footnote sources, appendix information and charts by downloading the full PDF report
A study of money’s evolution from physical to digital. Read survey results from thousands of consumers and hundreds of executives to better understand our global monetary future.
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