Future of money: the world without cash

More and more elements of our lives are moving into digital space and money is no exception. Paper money for several centuries contributed to the exchange of value of goods and services, but to meet today’s needs, an update of the financial system is needed. For this reason, many governments begin to experiment with digital currencies and study the optimal mechanisms for reducing cash turnover.

Paper money is the preferred method of calculations for individuals and organizations engaged in illegal activities. Honorary President Harvard Peter Sands considers cash in a monitored way to stimulate and develop the shadow economy. According to him, no other payment instrument provides simultaneously anonymity for the payer and the recipient, the absence of traces of transactions and such widespread use.

Without cash, it would be much easier to detect large-scale criminal activities, since the illegal flow of funds should be moved bypassing tracked bank accounts.

In addition, reduced dependence on paper money helps to reduce street violence. The studies of criminologists show that in areas whose residents prefer non-cash settlements, the overall crime rate is 10% lower.

Since paper money leaves no trace, then tax services are extremely difficult to check or track their movement.

For example, when the employer issues employees with wages in envelopes, they both do not pay social contributions, income tax. As a result, the state misses part of the funds, which is the main cause of the tax gap.

According to research, members of the Organization for Economic Cooperation and Development (OECD) annually express 2-3% of the total tax revenue (or about 1% of GDP), and for low-income countries, this indicator is 6-13%.

Production of material money costs money. The cost of chasing coins with a par value of 1 and 2 rubles exceeds their actual value. This is an ineffective use of resources, even without taking into account that the process of their production, melting of metals, ore and transportation, has a negative impact on the environment.

Economists believe that the most significant contribution of the smartphone, as inventors, are applications that transform the mobile device into a full-fledged wallet and a reliable tool for non-cash transfers and payments. Therefore, technical giants such as PayPal, Ant Financial, Tencent and Go-Jek offer market products that make it possible to freely make peer electronic payments to billions of people in the most populated countries of the world.

Governments are also engaged in promoting non-cash payments and at the same time decrease in cash. In countries such as Sweden, France, the United Kingdom, the system is so good that citizens have almost abandoned the use of cash, whose share in general turn is only a few percent.

The development of blockchain and other financial technologies stimulates central banks to move away from standard models and develop digital currency.

In September, Marshall Islands announced the release of the National Digital Currency

In addition to improving the efficiency of financial systems, safety and speed, the use of digital money allows banks and regulators to authenticate users, monitor transactions and comply with the principles of due diligence.

Soon, we will see the launch of digital currencies not only in developed, but also developing countries, since the authorities cannot ignore the explicit advantages of their use. This in turn will stimulate the growth of the popularity of decentralized cryptocurrency, which can legally coexist along with public money.

In the future, coins such as Bitcoin can become a universal online currency and freely convert into any national digital currency. It will simplify e-commerce, trade, money transfers and will allow billions of people who do not have access to banking services to join the global economy.

The financial revolution is inevitable because it is supported not only by corporations, but also governments. So once again, look at the bills in your wallet, soon they can become a souvenir and part of the history lesson for our children.

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