The convenience of card and mobile payments means cash use is in freefall globally. But we haven’t thought through the consequences of an all-digital world
22 August 2018
WHEN Marco Polo visited Kublai Khan at the end of the 13th century, little seems to have impressed him more than that the Khan used paper money. “In this city of Kanbalu is the mint of the Great Khan, who may truly be said to possess the secret of alchemists, as he has the art of producing money,” he wrote.
It isn’t hard to see why it seemed that way. To a European of the time, money consisted of things such as silver and gold coins that had intrinsic, tradable worth. The Khan simply took common old bark from mulberry trees, pulped it into paper and, with an array of signatures and seals, declared that it had value. No one in the Mongol empire dared refuse it as a means of payment.
Today this idea is so central to our lives that we hardly spare it a thought. But cash – physical money in the form of notes or coins – is losing its lustre. The rise of internet shopping and the increasing convenience of card payments, plus the extra costs for governments and central banks associated with cash, means all the talk is of taking money fully digital.
The necessary technology already exists. But as the dash away from cash gathers momentum, there are increasing rumblings about the downsides. Digital money might not solve all the problems of cash, and will bring a whole slew of new ones too. So do we want it?
Victoria Cleland knows a thing or two about cash. Currently the Bank of England’s executive director for banking, payments and financial resilience, she was until …