Eswar Prasad’s book, The Future of Money: How the Digital Revolution is Transforming Currencies and Finance, is a sweeping survey of fintech, crypto assets, and central bank digital currencies (CBDCs). Prasad, who has also written books about the Chinese renminbi and the US dollar, says the research that went into writing it has made him an optimist about the digital future.
The former head of the International Monetary Fund’s China division thinks innovation will bring many more people into the formal financial system. Prasad acknowledges there are hazards, such as the loss of privacy when everything we buy has a digital footprint, and the potential for some to be disenfranchised as physical cash is replaced with digital payments. But, overall, he’s betting the digital financial future will be better than the one we have known.
Source: https://www.toppr.com
Not only are there credit and debit cards, but there are also bank transfers, direct deposit, and online payments. It’s simply too convenient to make payments electronically, particularly with the Internet.
There is little doubt the elimination of cash would enable banks, credit unions, and other financial institutions to reduce staff. After all, it takes more people to handle the business of cash transactions. Though many believe a cashless society is inevitable, there are a few significant reasons why that may not be the case.
Despite the popularity of electronic payment methods among middle income and wealthy households, the poor remain disproportionately dependent on cash. The problem for many of the poor is bank fees. This can be compounded by low or unsteady income and deposits, resulting in non-sufficient funds (NSF) fees and even account closures by banks.
A study by the Pew Research Center found 11% of Americans don’t use the Internet. The percentage is even higher among the elderly and those who live in rural areas. Eliminating cash could potentially exclude this segment of the population from participating fully in the economy.
A recent study also indicated that 6.64% of consumers were victims of identity theft in 2017. That’s about one in every 16 people. Identity theft is one of the fastest growing crimes in America. Naturally, it’s closely connected with the increasing use of electronic payment methods, as well as the storage of financial data online. In certain financial transactions, the best protection against identity theft is to pay cash. The need or desire for privacy is a variable depending on individual preference. But there’s no doubt cash affords more privacy than electronic payment methods.
Ultimately, cash may in fact disappear. But it’s mostly a question of where and when. While it may disappear in some countries, it might remain in others. And if it ultimately happens in 50 or 100 or more years, it won’t matter much to anyone who’s alive today. In the meantime, take advantage of the best that cash and electronic payment methods have to offer. For my money, having both options is the best of all worlds, especially if there is any ang pow.
In Malaysia, BNM has been trying to reduce cash and cheque transactions with electronic payments. Many have it on their mobile devices. An area of concern is data breaches by hackers. Unless payment systems are foolproof, you may become a fool!
References:
Why cash will be obsolete within a decade, John Detrixhe, Sept 24, 2021 (https://qz.com)
The future of cash-will it disappear or become obsolete? Kevin Mercadante, Nov 3, 2020 (https://www.moneyunder30.com/what-is-the-future-of-cash
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