I read recently that central banks are seriously considering their own digital currency. Plans are in the making. Since the start of the year, a group representing central banks from the UK, Japan, Europe, Switzerland, Sweden, Canada, the USA, and the Bank of International Settlements have been looking into what needs to happen to make this a reality,
I get that, like every other facet of our lives, banks need to stay current in these digital times. This group of central banks talk about delivering public policy objectives, expanding the utility of central bank money, promoting more resilient, inclusive, and innovative payments. And while all that may be well and good and in the public interest, I worry about the day when we become a cashless world. I value the anonymity that comes with cash and I’d be more than sad to lose it.
I hadn’t realised that in France, for instance, it’s illegal to pay cash for anything over €1000. And yes, I know that if we didn’t have cash, drug lords would be out of business and undocumented workers would be a thing of the past. But if I use my card to pay for every single thing I buy, someone out there has a complete picture of my life. It seems like my cash purchases are all that I have left of my privacy. That worries me. I haven’t used supermarket loyalty cards since I woke up to the fact that they were tracking what I eat and using that information to further streamline my ad feed so that I’m caught in a world of sameness.
In July this year, I reposted a meme on what would happen in a cashless society. I went to find it today and it’s disappeared. The content is no longer available. I remember it pointed out things that without cash, we’d have no flea markets, no garage sales. We couldn’t slip a banknote into a birthday card or pay for the odd job or buy a piece of second-hand furniture. When I went looking for why it disappeared, I found out that it had been incorrectly attributed to financial guru Dave Ramsey – perhaps this was enough for it to be classified as fake news and pulled.
A piece by Gary Reddin on The Lawton Constitution page explains that Ramsey isn’t at all worried about a cashless society. Reddin goes on to list three pros and three cons about a cashless world.
- Reduce crime.
- Reduce cash management costs.
- More convenient.
I can see the crime thing. And when I see what my bank charges me to withdraw cash, I cringe. And yes, I get the convenience aspect. But what of the disadvantages?
- Increase in income inequality.
- Exacerbate bad spending habits.
- Increase in the threat of financial abuse.
So many people (1.7 billion) don’t have access to a bank account. Many more (am thinking here of my parents’ generation) are dealing with banks pushing everyone online and making it difficult to withdraw cash over the counter. I’m reminded of a story I heard during the week:
The old lady handed her bank card to a bank teller and said, “I would like to withdraw $10 The teller told her, “For withdrawals less than $100 please use the ATM.”The old lady wanted to know why … The teller returned her bank card and irritably told her, “These are the rules. Please leave if there is no other matter. There is a line of customers behind you.”The old lady remained silent for a few seconds, then handed the card back to the teller and said, “Please help me withdraw all the money I have.” The teller was astonished when she checked the account balance. She nodded her head, leaned down and respectfully told her, you have $300,000 in your account and the bank doesn’t have that much cash currently. Could you make an appointment and come again tomorrow?The old lady then asked how much she could withdraw immediately. The teller told her any amount up to $3000“Well, please let me have $3000 now”, she The teller then handed it very friendly and respectfully to her.The old lady put $10 in her purse and asked the teller to deposit $2990 back into her account.The moral of this tale ……. Don’t be difficult with old people, they spent a lifetime learning the skills.
I have one credit card and only because it’s impossible to rent a car without one. I know from bitter experience how difficult it is to spend money I don’t have. I don’t ever want to go back to that place. I retrained myself on the advice of an old friend who told me to take what money I had for the month out of the bank and divide it between envelopes labelled food, petrol, socializing, and miscellaneous. It didn’t help of course that the first month I did it, the drug-using son of another friend helped himself to the contents of my food envelope. My spending habits are still a work in progress. I’m all too aware how easy it is to slide.
Going back to our elderly and our vulnerable – having to sign over access to their bank accounts because they can’t navigate the digital financial world leaves them wide open to family who have, say, bad spending habits.
Admittedly, I know very little about the world of digital currencies, From what I understand cyrpto currencies, like bitcoin, are treated as property for tax purposes and are not considered legal tender. What the central banks are proposing is a fiat digital currency – one that would be legal tender. Regardless, to my unedified mind, I think the disadvantages of a cashless society outweigh the advantages. I’d be all for going back to bartering, or better still of adopting time as a currency.
I’m grateful, that for the moment at least, cash is still a thing.