The ever-increasing number of contactless card transactions in the UK and the growth of cryptocurrencies are leading many to herald the death of cash. As I wrote in my blog, Cash vs. cashless: A question of liberty?, I believe and hope that it will be a while before the world is ready for a completely cashless system, if it ever is. I believe that alternative currencies may be a medium of exchange. However, while bitcoin hoarding is not uncommon, cryptocurrencies have yet to prove themselves in another key function of money (i.e., as a store of value). Savers turned to safe institutions and to gold during the financial crisis. And no institution is as safe as governments, with the power to raise taxes. So my bet is that central bank money (so-called fiat currency) will stay the course.
So is this the end of cash?Not quite, but there are those who think that cash might have had its day. Andy Haldane, chief economist at the Bank of England, recently made the case for ditching cash as negative interest rates could theoretically be applied to digital currencies, giving the BoE much more flexibility should we go through another recession.