Worldpay's Global Payments report 2021 claims that cash payments in UK shops in 2020 made up 13.4% of total payments, down from 27.4% in 2019. By 2024, it predicts, they will be down to just 6.9%. By the same year it will be down to just 0.4% in Sweden.
The Bank of England's statistics for the number of banknotes in circulation tell a somewhat different story to Worldpay's report: they have surged by 14% over the past 12 months, from £70.2 billion worth to £80.0 billion. Far from dumping cash in response to the pandemic we are hoarding more of it than ever ' and Covid seems to have accelerated the rate at which we are stashing it away. Why? There was a similar upwards jerk in the quantity of cash in circulation during the financial crisis of 2007/08. That is perhaps to be expected: in times of financial crisis, some people start to lose confidence in banks and other financial institutions, and start to see cash as a relatively safe option.Those fears have only increased as a result of the bank bailouts just over a decade ago.
If we really did surrender our right to use cash, the option of protecting ourselves in this way would be gone. We would be forced to keep our money in electronic form and to pay whatever charges the payments industry fancied charging us, given that they would no longer have to compete with the free option of using cash. And that's just the half of it ' we would face a future in which a handful of corporations had the power to cut us off from the right to spend money at all. We would also face a future in which central banks could attempt to control the economy by means of negative interest rates ' something which they would struggle to do at the moment, as savers could respond by withdrawing their savings and keeping it in cash.
Many people, I think, can see these arguments against a cashless society and will not give up the right to use cash willingly. The banknotes statistics show the scale of potential resistance. Yet there remains a big threat to cash: inflation. It is one thing to keep a large quantity of cash stashed beneath the mattress when its real value is diminishing by less than one per cent a year. But what if the buying power of a £20 note was being eroded to the tune of five percent a year? ' something that could happen given building inflationary pressures.
About the Author: Glen Callow
