This week I had the opportunity to visit the Bank of England Museum, a place of history and financial insight. During my visit, I learned more about how cash has evolved and acts as a medium of exchange as well as two notable movements: Keep Cash Alive and the Central Bank Digital Currency (CBDC).
As we all know the use of cash is declining to the point where many shops refuse to accept it. However, cash serves a crucial role for individuals who do not have access to digital payment options, such as those who don’t use technology like some of the elderly/disabled individuals. In addition, in the event of power outages or cyberattacks cash provides a safety net.
While the Bank of England recognises that cash still plays an important role, they are exploring the concept of the digital pound which would be issued by the Central Bank. This differs from private digital payments facilitated by banks because the digital currency would not involve a bank account. It would be like having a physical pound but it would be carried digitally in your phone.
While some argue that the CBDC could lower transaction fees and offer faster and more trustworthy transactions, others raise privacy and security concerns such as our transactions being monitored and controlled by the government. Is this what we really want? The Bank of England’s response to this is that new laws will ensure privacy and neither the Bank of England or the government would be able to dictate or restrict how you would spend your digital pounds.
However, other questions are raised such as how religious festivals such as Eid al-Fitr will be celebrated when it is custom for elders to give cash gifts to younger family members? Could this also be the end of the tooth fairy as we know it?!
Just because a CBDC may be more convenient for those who are tech-savvy, will it take away our freedom and will we lose the meanings which we associate with giving cash gifts?
Will the ‘Keep Cash Alive’ movement win, will the future of money be totally digitalised or can the two coexist?
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