The Tribune

ACTIVTRADES WEEKLY

By Ricardo Evangelista

www.activtrades.bs

Cash, in one form or another, has been around for millennia, being used as a means of payment and storing wealth. Throughout history large and small transactions have been carried out, using settlement methods that evolved in accordance with whatever was considered valuable, as well as the resources and technology available at the time. Soldiers of the Roman empire received part of their payment in salt, which was considered a valuable commodity in those days; this is from where we derive the modern English words “soldier”, (sal dare – which means to give salt) and “salary” (originated from the Latin salarium).

Other commodities have assumed the role of cash, like for example gold and silver. Precious metals have been exchanged in transactions at least since 5000 BC Around 700 BC south-eastern European merchants, the Lydians, produced the first known gold coins, giving birth to the concept of a standardised unit of value, which they named “electrum”. The impact of this momentous change reverberated down the centuries and is still felt today; 21st century humanity would be very different without money; maybe better, maybe worst, but certainly not the same.

Today, many believe the future will be cashless; money won’t be more than numbers in electronic ledgers; an abstract entity without physical representation, such as bank notes or coins. However, the transition may not be as straightforward as some expect; cash still plays a fundamental role in the lives of countless men and women around the world.

According to figures published by the Bank of England, there are currently 70 billion pounds worth of bank notes in circulation, roughly equivalent to £1000 per person in the UK, more than twice as much as a decade ago. Such large numbers are surprising because most of us don’t hold £1000 (or equivalent in other currency) in cash, meaning the hoarding of cash by some is still happening, in particular by those linked to the so-called shadow economy.

Also interesting to notice that the value of euro bank notes distributed to individuals and businesses rose by €41 billion in the four weeks to April 10, as the coronavirus crisis took hold; it seems hoarding physical cash, as well as toilet paper, can, for many, be a source of comfort during uncertain times.

But it is undeniable that historical momentum points to an increasingly cashless future. In the more advanced economies the use of debit and credit cards, quite often through contactless technology, is common, as is online banking and electronic transfers. The number of high-street bank branches has declined, with most operations now carried out online, frequently via apps on smart phones.

In developing countries, where many don’t have access to electronic banking, or in some cases not even a bank account, the use of mobile phone payment methods, like M-Pesa in Kenya, is already an alternative to the use of physical money.

So, we may indeed one day end up living in cashless societies, but it won’t be just yet.