This study investigates the evolving landscape of currency usage in Sri Lanka, analyzing the dynamic interplay between the sustained reliance on traditional cash (notes and coins) and the rapid proliferation of digital payment methods. Historically, cash has dominated Sri Lankan economic transactions, but recent advancements in financial technology, increased smartphone penetration, and government initiatives promoting digital payments have significantly altered consumer and business behaviors. This abstract explores the socio-economic drivers behind the continued preference for cash among certain demographics (e.g., rural populations, informal sectors) while simultaneously examining the factors accelerating the adoption of digital platforms, including mobile banking, online payments, and QR code-based transactions.
The research aims to identify the economic implications of this currency evolution, focusing on aspects such as financial inclusion, transaction efficiency, public policy interventions, and the challenges associated with a dual currency system. It also considers the potential impacts on monetary policy effectiveness, tax collection, and the overall formalization of the economy. Understanding these trends is crucial for policymakers seeking to foster a more efficient, inclusive, and technologically advanced financial ecosystem in Sri Lanka, ensuring a smooth transition while addressing the unique needs of diverse economic segments.