Volume 56, Number 6, June 2019
Cashless or less cash? Following the recent “will we or won’t we . . .” interest in the proposed demise of our lowest coin denominations and the ever-growing call by the vociferous few for the banishment of all kinds of cash transactions, we have invited our regular columnist DR KERRY RODGERS to give us his opinion on the current state of affairs......... THE last couple of decades have seen an increasing amount of debate over whether coins and notes have any future in our societies. There is a growing belief—especially among well-off, educated, middle- and upper-class urbanites—that the rise in digital transactions will see no further need for cash. For collectors the elimination of coins and notes will certainly have a negative impact on those of us who enjoy new issues. Sure, we can continue to collect the old and the historic, just as ancients are collected today, but new issues are very much part of our industry/hobby/pastime/call-it-what-you-will. Last year saw direct action taken by Sweden to eliminate both coins and notes. Riksbank Deputy Governor, Cecilia Skingsley, announced to a London banking conference last December that, “Sweden will probably become cashless in three to five years.” While sections of the country have embraced the notion with fervour, the last few months have seen issues arise where the change has had a strong negative impact on sections of the Swedish community, particularly the vulnerable. This has led to a certain amount of back-tracking by the Riksbank. Those concerned by any possible changes can take comfort from a speech given by Sarah John, Chief Cashier of the Bank of England (BoE), at a Currency Conference held in Dubai on April 8. She was concerned solely with the situation in Britain. Her speech was jammed-full of hard facts. Some brought this writer up with a short, sharp shock. She took as her starting point the oft-cited rapid decrease in the use of coins and notes in Britain: “In 2007 cash accounted for 61 per cent of total transactions. By 2017 this had reduced to 34 per cent of transactions.” While it is now commonplace in Britain for folk to tap their card or punch a pin when paying for goods and services, over a third of 13 billion annual payments in the UK are still made in cash—that’s over 4.3 billion cash deals per year. Ms John believes that transactional cash use will continue to decline in the UK. This will especially be the case as the country adopts further technological developments such as peer-topeer payments via messaging apps as used in Sweden and China. However, she predicts that, “although cash use is falling, it is highly unlikely that it will fall to zero. Cash is relied on by a significant minority of people in the UK for almost all of their payment needs.” Her words “significant minority” are important. The facts in her next sentence left me gob-smacked: “Approximately 1.3 million people in the UK do not have a bank account and 2.2 million people—or 4 per cent of the UK adult population—rely predominantly on cash for their everyday spending.” This is the same hard reality that has suddenly applied the brake to the Riksbank in its dash to cash-less-ness. Ms John stresses that, “The tangibility of cash is a key benefit, allowing [those having total household incomes of less than £10,000 per year] to physically calculate and budget their spending . . . Digital payments do not yet work for everyone. Technological advances in payments have the power to support financial inclusion. But they currently tend to be designed for the mass market rather than for vulnerable groups . . .”. Further, Ms John recognises that, “there are also significant numbers of people who want to choose to use cash. There’s a variety of reasons why people choose cash, including because it is a useful budgeting tool, it is quick, and it works when other payment methods do not.” In a BoE survey 61 per cent of respondents chose cash as one of their top two preferred payment methods with 90 per cent of people carrying cash in their wallets. (At this point the Chief Cashier avoided mentioning the “Black Economy” although destroying it—and its accompanying tax avoidance—is a primary reason politicians are so keen to go fully digital.) In her conclusion Ms John had good news for collectors: “I therefore expect that cash will remain a critical part of the payments landscape for some time to come; it will continue to be relied on by some for almost all of their payments, and by many for some of their payments—often depending on what is being bought and through what retail channel.” In reading Ms John’s speech I was reminded of a comment made by Ray Hardie, Deputy Governor of the Reserve Bank of Fiji, four decades ago. When asked if Fiji had any plans for introducing a $50 or even a $100 note. Hardie simply said, “For the vast majority of Fijians a $20 note is a vast amount of money. Most are unlikely to handle one in their lifetimes”. The $50 note was not introduced until 15 years and three coups had elapsed. The $100 had to wait until 2007. Although Hardie’s reasoning is almost the converse of John’s, both acknowledge that a central bank must be aware of the needs of all sections of the community it serves, a matter the Riksbank is just recognising. Fortuitously, the Hardie/John approach embraces us collectors. Long may it do so.
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