If you were to glance at the latest tech or payments industry news, you could be forgiven for thinking that the days of hard currency, or actual, physical, cash were numbered.
But, away from the front line of the digitalisation of all things banking related; bitcoin, e-wallets, online or mobile only accounts; peer-to-peer money transfer services; a group of organisations with a vested interest in the continuing use of physical currency are forming an alliance to secure teh future of notes and coins.
The International Currency Association was formed last year to “provide a powerful and cohesive voice to keep currency a preferred payment choice.”
The Organisation has 3 main aims, according to its website: to support and promote currencies worldwide; to provide a framework to foster innovation, and to encourage higher ethical standards.
It doesn’t sound at all dissimilar from a the stated aims of many blockchain or mobile-based companies.
The ICA is on a mission to provide the “powerful and cohesive voice” that its members (it costs companies up to $35,000 per annum for membership) believe has been missing from the debate about the digitalisation of currency and the gradual disappearance of cash.
But in fact, as the ICA have been quick to point out, the value of currency held by the public in both Europe and the USA has been rising as a percentage of Gross Domestic Product, not falling, since the beginning of the 1980’s.
A 2015 survey by the Federal Reserve revealed that Americans today have an average of $59 dollars in cash at any given time – $5 dollars more than three years earlier, in 2012; $54 dollars.
There have been many explanations put forward as to why the public are still holding onto their physical cash at a time where there are so many, supposedly more convenient options for storing wealth. For example, a public backlash against rock bottom interest rates may be leaning many families to conclude that they are better off storing their cash “under the floorboards” than paying a bank to look after it and being offered little in return.
Other’s posit that the banks’ automation of services are actually creating a greater need for cash thanks to the increasing number of ATM machines and cash vaults as opposed to physical, customer facing banks.
Cash is also highly useful in a crisis – for example during the recent hurricanes that devastated the US and Puerto Rico – where electricity lines were cut making online or cashless purchases impossible.
Another debate is around security. A Harvard Economist, Kenneth Rogoff published a book last year in which he argued that the main use for bills of $100 – or the equivalent high value in other currencies – are today almost exclusively used for “tax evasion, money laundering and bribery.”
In India, the government withdrew its two highest value notes from circulation last year in order to combat corruption, and many other countries are pushing the cashless agenda in the light of concerns about real currency and the nefarious uses it can be put to.
But, of course, the opposite is also true. Digital payments can be used to make illicit purchases – and regularly are – witness sites like Silk Road, which allowed people to purchase weapons, drugs, or fund criminal activity – before it was shut down – and the so-called “dark web”. Although its reputation has been enhanced significantly in recent years, bitcoin used to be synonymous with illicit transactions – and considered the reserve of the criminal underworld.
The ICA’s UK based Director General, Guillaume Lepecq, recently spoke about the issue in an interview with CNN, saying: “evidence shows that terrorists essentially use anonymous prepaid cards to move money around – so we think that’s a totally false argument. We’re not very happy with those restrictions. He was referring to a recent decision by both the French and Spanish governments to impose a 1,000 Euro limit on cash transactions – to help combat terrorist activities.
The ICA’s membership is formed of companies based all over the world, from Switzerland, to Canada, to Russia and Japan, and unsurprisingly features a large number of companies involved in the making and destroying of banknotes and coins.
The ICA is promising to provide advocacy, research reports, and a knowledge exchange for its members, and any legally incorporated company that supplies ether currency, or products, equipment or technology related to its design, production, handling, and circulation, are eligible to join.
It seems the “war on cash” is far from being won. In fact, as Sim Bielak, Chief Marketing Officer of Suzohapp, a company that makes machines that are coin-operated, argues: “the cashless hardware business is very commoditized; it’s a very difficult business to make money in.”
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