Bienvenue à la société sans numéraire, ou pas

20161114_2151161It would have once upon a time been seen to be something impossible, a society without cash. Now times have moved where its feasibly possible that in the next 2-20 years we could see a cashless society.

There are many businesses that seem keen to push for cashless alternatives. A handful of years back this was relatively minimal but its increased in the last few years with the likes of PayPal advertising is services as “new money” in its most recent round of advertising.

While I admit there could be some benefits to not using cash there are also some potential pitfalls.

As a 27-year-old I easily got lulled into not having cash or a minimal amount needed (example: for a taxi fare) but I’m going to change my practises due to the fact that I could be “helping to usher in a cashless society”.

So what could go wrong in a cashless society that I need to be aware of?

Your bank has a system fault While the problem would likely be minimal due to the fact that banks have I.T departments to resolve this and allow you to make and receive payments.

Your bank blocks your account for an indefinite period This sort of thing is more common than most would think. Usually its due to overzealous application of money laundering regulations. While it seems harmless on the surface I’ve heard of stories where mothers have struggled for money to feed  their children as thier bank account has been blocked even when there are ample funds in the account. While I can understand the need to fight against money laundering criminals it has been known that upstanding people have had thier bank accounts blocked for days without explanation due to overzealous application of the rules. In cases like this cash can be a godsend while waiting for banking facilities to come available to you.

You could in theory spend more money To part with cash creates a psychological feeling of parting with something you’ve hard-earned. To pay by card or swipe a phone does not produce the same psychological stimuli.

Financial privacy would be a thing of the past While it’s great that it would make it closer to impossible for financial criminals to operate, it would essentially evaporate any privacy as to your financial dealings.

Negative interest rates This is the one that could be the most concerning of all. At the moment interest rates on savings are at an all time low in many countries, they could even be set to get lower in the next handful of months to two years. There’s one thing that’s relatively unlikely to happen all the time we have cash in circulation and that is any interest rate below 0%. Should central banks try this before cash is abolished it could lead to a bank run.

Bail ins These are a new concept but has been used in Greece. Effectively during times of financial hardship in the banking sector the banks own customers lose some of thier savings as these are “taken” by the bank instead of it being funded by the taxpayer or the government. Any cash you have that is not in the electronic banking system will be outside the checks and balances should a bail in ever be considered.

All in all I reject the cashless society, sure I can see how it’s portrayed as “the next generation” of money, but when my options are known I’ll stick with using notes and coins into the future.

Samantha Eaton

La Reina Razonable