Cash, long a refuge in uncertain times, now under suspicion

‘Cash combined with courage in a crisis is priceless’

financial services.

“The culture,” he says, “is slowly changing.”

“Cash combined with courage in a crisis is priceless,” billionaire investor Warren Buffett says.

In crisis-hit countries and parts of the world gripped by conflict or inflation, cash is still carried in thick wads for simple shopping expeditions.

In Lebanon, as the economic situation deteriorated late last year and the fear of banks collapsing mounted, many people began saving cash in their homes. The sale of home safes surged. An estimated $3 billion was withdrawn and stashed at home, according to the governor of the country’s Central Bank.

As banks imposed capital controls, trips to the bank to withdraw foreign currency - followed by a trip to one of the ubiquitous exchange shops to change money on the black market - became the norm for many Lebanese.

“All I do is handle cash all day,” said one money changer in Beirut, who insisted on being identified by his first name, Ihsan. He said he feared unwanted attention from authorities.

“I wear gloves. But honestly? Corona is the last thing on people’s minds right now,” Ihsan said. “All they’re thinking about is how to handle this crisis and get money to live.”

In Iran, one of the world’s worst coronavirus hotspots, there are no international bank cards, like Visa or Mastercard, because of U.S. sanctions. Many were surprised at the new banners that appeared at some gas stations in Tehran: “Service is only for those who will pay by debit cards.”

In Venezuela, it is common to see bolivars littering the streets because the local currency has lost its value.

“The truth is that I haven’t had any bolivars in my wallet for a long time,” said Fátima Figueras, a 32-year-old office worker, waiting in line to enter a Caracas pharmacy. “What worries me most is having to hand my debit card to a cashier who touches it,” said Figueras, wearing a facemask against the coronavirus.

Cash still rules in West and Central Africa even with the growth in regional banking options and mobile money service providers. Monthly banking account fees are prohibitive for many, and the self-employed often keep their savings at home in hard currency. ATM machines often don’t work.

Dorothy Harpool, director of student and community initiatives and lecturer at Wichita State University’s W. Frank Barton School of Business, predicted the pandemic would lead some consumers to rethink their use of cash. But going completely cashless, she says, is a long way off.

“Until everyone and every country has reliable access to the internet, I do not believe the pandemic will singularly change past practices,” Harpool said. In particular, cash transactions are also likely to remain for businesses operating under the radar of government and other regulatory bodies.

Ihsan, the Beirut money changer, said there are certain things you just can’t do without cash - particularly in a dysfunctional and developing nation.

“Like how else can you bribe a government employee to get your business done? With a credit card?” (AP)