Question

How do you think money and banks might evolve in the future?

Answer 1

Developed economies are rapidly moving towards becoming cashless societies. In the UK, only 30 per cent of payments are now made using notes and coins, and that is expected to fall to 10 per cent by 2034. In Sweden, Europe’s most cashless society, notes and coins account for just 2 per cent of transactions by value. South Korea is planning to phase out cash completely in 2020. Paul Amery, founding editor of New Money Review, says: “Cash will have completely disappeared in five years’ time. It’s happening far more quickly than most people expected or central bankers feel comfortable with.” However, a cashless society won’t necessarily be a Utopia. Older people, those who are mistrustful of technology, those who live in remote areas with poor connectivity and those concerned about loss of privacy risk being marginalised. Even though they are more convenient and safer to use, and cheaper for the financial sector to operate, digital payment infrastructures are more vulnerable to cyberattacks and technological outages than cash. In terms of the psychology of money, there are fears cashless payments could cause consumer debt to spiral.