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Should cash be abolished?


banknotes and coins

Dr Rashmi Arora, Associate Professor in Development Economics, will be delivering a public talk on 'Should cash be abolished?' as part of Bradford's Pint of Science festival.

Writing in the Yorkshire Post, she explains why notes and coins will remain, at least for the time being. 

"There is a lot of talk about the future of cash right now. Earlier this month, senior Bank of England official Sir Jon Cunliffe, said cash will become ‘less useable’ as online commerce grows and stores increasingly reject bank notes and coins. 

Most people do their banking online and most of us rely on using our bank cards or mobile phones to pay for goods and services, particularly since the pandemic when health concerns forced an escalation of online and contactless payments. The majority of us probably never go into a bank branch anymore. 

What’s interesting though is that the total value of notes in circulation has actually increased. The smaller denominations have decreased but higher denomination notes have increased.  Research suggests people are hoarding these larger denominations as a store of value, a trend similar to some other countries.

It could be that having physical cash gives people a certain security. As the first UK lockdown was announced, people rushed to ATMs to withdraw cash, more as a precautionary response. They couldn’t then use it because everything shut, but that gives an interesting picture of how people think about their money. 

Associate Professor in Development Economics

So, the big question is, do we still need cash? Should it be abolished? In my opinion, we will continue to use cash, certainly for the foreseeable future. 

Cash is important to a number of sections of society, for example the elderly who may not be as tech-savvy as younger generations, or may simply prefer to continue using cash as that’s what they have always done. It’s also important for people who are paid in cash, for example casual workers, and may not have a bank account, as well as people who do not have access to the internet, such as those on lower incomes. 

There are also still a number of industries which only accept cash, for example market stall holders and taxis, although many of these are coming round to having card machines. Public toilets are another example, most of those only accept coins. 

But the places that only deal in cash are decreasing and Covid-19 hastened that transition. Many small vendors now accept contactless payments, ones you might never have expected to do so before, like mobile coffee stands. You can pay for car parks with your bank card or apps on your phone such as Google Pay or Apple Pay. ‘Card only’ signs are increasingly popping up. 

'Nearly cashless' countries

The Bank of England is very clear that cash is here to stay. Cash cannot be abolished because it’s still being used by a number of population groups. 

There are, however, arguments for the abolishment of cash. Professor Kenneth Rogoff, one of the world’s leading economists, argued for the phasing out of paper money to fight crime and tax evasion. 

Cash encourages corruption. For example, it’s used in transactions for drugs, weapons, terrorism. It’s often used in gambling, although that is increasingly online too. Notes and coins carry the risk of bacteria. 

There are countries which are nearly cashless already, like Sweden, New Zealand and Norway. Several other types of digital currencies are emerging. At present, 114 countries are considering Central Bank Digital Currency, according to the CBDC tracker, compared to only 35 in May 2020. The UK is one of them. 

It’s like cryptocurrency, except that the Central Bank says it’s more stable, more reliable and more regulated. Cryptocurrency is currently not regulated and it’s very volatile, the value can go up and down. It’s also illegal in many countries. 

As of April 2023, around 11 countries have fully launched CBDC, while some countries such as China and India are currently piloting CBDC. We will have to see what happens with CBDC and how people react to that. If it really picks up, then perhaps people will move on to a cashless society.

For now though, as we look forward to the new King Charles banknotes coming into circulation, I believe cash is here to stay."

  • Dr Arora will be giving a talk, ‘Should cash be abolished? If so, what comes next?’ at Bradford’s Pint of Science festival on Monday, May 22nd, at Cafe Liza, Bradford, from 7.30pm to 9.30pm. For details of all Pint of Science events and to buy tickets, go to