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What the Decline of Cash Means for the Global Economy

Personal_Finance / War on Cash Sep 27, 2018 - 10:04 AM GMT

By: Steve_Marks


If there's one economic trend that has quickly come to define the nature of money and the future, it's the decline of cash. Currently, it's estimated that a mere 8% of all global wealth actually exists in a physical cash format. The rest is just numbers on a screen, with no physical presence whatsoever.

While this is unlikely to ever become an overnight issue, unless everyone in the world decided they all wanted to withdraw their life savings at the same time, it does raise some interesting questions about the future. The proportion of physical cash left in the world is shrinking fast and very soon cash as we know it may not exist at all. Here's what this may mean for the global economy.

An Easier World for Consumers

The reduction of cash to an easy-to-trace, easily-to-move digital format may seem scary for some, but it's actually a perfect scenario for the average consumer. With a majority of transactions now being completely cashless, consumers are able to pay for virtually any good or service in an instant, no matter where they are in the world, with the added benefit that the money is less likely to be lost or stolen.

Some digital platforms have been pioneers in the cashless revolution, such as online retail giants and online casinos. Online casinos encapsulate perfectly the benefits of going cashless: consumers are able not only to deposit money with a casino from their own computer, they are also able to buy services, amass more digital money via online match bonuses and of course, win money and increase their wealth through online versions of games such as slots, blackjack and poker. Just a quick look at casino sites like this illustrates very effectively why a cashless economy makes the consumer king. The future truly is digital.

Reduced Crime

One of the biggest benefits is the effect this trend has on global stability. Firstly, money being digital makes laundering significantly more difficult, given that everything is traceable and closely monitored. On a more basic level, the decline of cash and abolition of large notes makes it much harder for criminals to transport large amounts of illicit cash. There's also the added benefit that potential victims are safer if they don't use cash, as only the most skilled criminal minds in the world would even have a shot at stealing someone's life savings if they're held digitally in a bank. 

Heightened Security

This links closely to the previous point but requires attention. You can fill a bank vault with $100 bills, station dozens of armed guards around it and instal bomb-proof safe doors, but there's still a chance someone will be able to break in and grab the money. The digitisation of money means that there's quite literally nothing for anybody to steal. While of course digital accounts are still prone to hacking and forced withdrawals, the fact is that the incentive to steal is considerably lower if there's no cash on the table.

Some people take comfort in the reassurance of having cold hard cash, but this is a red herring. Real security comes from technology, rather than outdated modes of currency.

By Steve Marks

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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