You can spend weeks paying for everything with your phone and still feel better knowing there's some cash at home. That might sound old-fashioned until your bank's app stops working, your card gets declined for reasons nobody can explain, or the power goes out while you need groceries.
In those moments, the idea of financial security stops being an abstract ideal you strive for and turns into something very practical. You need to be able to pay, and the money in your account only helps if you can get to it.
This seems to be what's going on in the UK, as Britain's newest cash numbers capture this change surprisingly well. In a Sept. 17 explanation of its banknotes, the Bank of England said cash made up just 8% of UK payments in 2025, down from 58% in 2009. However, the value of notes on its balance sheet went from £50 billion to £99 billion over that period, with £94 billion now held by the public in Britain and overseas.
Those are nominal pounds, so inflation accounts for part of the increase, and the overseas holdings mean we can't treat the total as money British households have stuffed into drawers. But even with those qualifications, the contrast is striking: people use cash less often but still want to own it.
The Bank describes this as the paradox of banknotes. Anyone who's kept emergency money in an envelope probably understands it without needing a central bank to give it a name.
Your money, within reach
Digital payments have earned their popularity. They're quick, they spare you a trip to an ATM, and they make buying something from another country almost absurdly easy. Most people have no desire to give that up.
But convenience depends on a collection of things working together. Your device needs power, communications networks need to function, and the institutions processing the payment need to let it through. Having three cards doesn't give you three independent backups if the same outage prevents every shop nearby from accepting them.
Cash gives you another way to pay. Once you have the notes, handing them to someone doesn't require a bank to approve the transaction or a phone to connect. That independence has a value even on the many days you don't need it.
Imagine being able to afford a tank of fuel but being unable to buy it because payments are down. Your balance hasn't fallen, but your practical freedom has. Money you can use immediately is a different kind of security from money an institution confirms you own.
Central banks understand this perfectly well. The Dutch National Forum on the Payment System, which includes the central bank, banks and consumer groups, advises households to prepare for three days of disrupted electronic payments. Its cash benchmark is €70 per adult and €30 per child, based on minimum expenses for essentials such as food, medicine and transport.
That's a local estimate, with households encouraged to adapt it to their circumstances and build it gradually. The accompanying advice also tells retailers to keep enough coins and notes to give customers their money back when they overpay.
There's a privacy benefit, too. Paying another person directly in cash doesn't create the same bank transaction record as a card payment. Wanting that option is a reasonable preference for an ordinary person buying ordinary things. Financial freedom includes being able to conduct some of your daily life without generating another entry in a company's database.
Crises make the argument for you
The European Central Bank's research on cash during crises documents surges in public demand during the 2008 financial crisis, Greece's sovereign debt crisis, the pandemic and the war in Ukraine.
Even though all of these were very different emergencies, they shared a reason for people to want more control over money they might need at short notice.
During the pandemic, euro banknote circulation expanded even as everyday cash payments fell.
The April 2025 blackout across Spain and Portugal also led to a significant increase in the use of cash. The ECB said physical cash helped when digital payment infrastructure failed, although shops still needed to be open and capable of serving customers. Banknotes don't restore electricity to a supermarket's refrigerators or fuel pumps.
That limitation helps define what cash actually does. It removes one dependency from a transaction, giving people a better chance of continuing with their lives when part of the system stops working.
Unfortunately, financial and political crises can turn that desire into a need. Someone worried about access to their bank account may want notes in hand. Someone worried about the currency itself faces a different problem, because withdrawing local cash leaves them exposed to its purchasing power.
This is where gold enters the picture. Physical gold gives its owner an asset that isn't a promise by a bank to pay out a deposit, or by a government to maintain a currency's value. Its appeal makes sense when people fear that the institutions protecting their savings might also be the source of the danger.
The World Gold Council's full-year investment figures show global bar and coin demand increased 16% in 2025 to roughly 1,374 tonnes, the highest annual total since 2013. Its report connects buying in China and the Middle East with geopolitical uncertainty, alongside momentum from higher prices. The appetite wasn't uniform: US bar and coin demand fell by volume.
Gold brings its own trade-offs. Its price can drop when you need to sell, dealers charge a spread between buying and selling, and keeping it safe costs money or effort. Paying for a prescription with a small gold bar also requires considerably more work than handing over banknotes.
Cash and gold answer different fears. Cash can help you get through a few days when payments fail; gold offers a way to hold wealth outside a particular currency, with market risk attached. Neither does every job people associate with the word “safe.”
Keeping the cash option alive
Britain's latest announcement shows how much institutional work supports something as simple as a banknote. The Bank of England plans to retain £120 billion of government bonds to back notes indirectly during its transition to a new framework, part of the broader balance-sheet overhaul covered by CryptoSlate.
That arrangement doesn't make pounds redeemable for gold, and backing the notes doesn't guarantee what they'll buy next year. Inflation still eats into purchasing power, while holding cash also means giving up the interest it could earn elsewhere. Keeping all your savings at home adds theft and fire risks to the list.
But judging an emergency reserve only by its return misses why someone holds it. People pay for spare keys, insurance, and backup batteries because access has value when the usual route fails. Forgone interest on a modest cash reserve can be understood in much the same way.
That backup also depends on society keeping cash practical. Households need somewhere to withdraw it, businesses need to accept and handle it, and the networks supplying banknotes need to survive periods when fewer people use them. If those services disappear, telling everyone to carry emergency cash becomes an empty instruction.
The choice extends beyond how we pay for coffee. Preserving cash gives regular people a small amount of independence that doesn't depend on having technical expertise, an expensive device, or permission from a payment provider at the moment they need to spend.
You can love your banking app and still want that. When the system works, cash can stay in the drawer. When it doesn't, being able to buy what you need is a very good return.
The post Why cash hoarding in the UK proves the world still craves permissionless money appeared first on CryptoSlate.
