Cash is dying, but we'll miss it when it's gone

Most people now pay with debit or credit cards rather than cash. It might seem to you that this doesn’t matter much. But it does.

Still use cash? You're a dinosaur. Last year in the UK, a mere £1 in every £5 was spent in cash. Most people now use debit or credit cards (or some other kind of digital money) for everything. It might seem to you that this doesn't matter much or perhaps that it is a good thing.

Cash is grubby; it's a bore to get hold of (the number of ATMs in the UK is falling) and impossible to replace when lost. Its absence also makes life easier for honest traders. With no cash to deal with, VAT returns practically calculate themselves, tills don't need reconciling and those trying trips to the bank to deposit takings disappear forever (as do the robberies that come with having cash).

The lack of it also makes life harder for dishonest traders: it's tough to avoid tax if you can't get paid in cash. Finally, the disappearance of cash is great for central bankers: no cash means no lower limit to interest rates (no cash, no bank runs!).

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However, cash also has features we should be very wary of giving up. It is one of the few things left that is not dependent on some sort of technology and that allows for entirely cost-free transfers. It is also good for our personal finances. The less we use cash, the more we seem to spend (card payments just don't seem to us to be real money in the same way cash is).

One example: a few years ago, McDonald's said that the average bill in the US when people used cash was $4.50 with credit cards it was $7. Might the death of cash be one of the causes of rising indebtedness and bankruptcy, particularly among the young? It's worth thinking about. Finally cash is anonymous.

Use your debit card to buy something and your bank knows where you are and what you are up to. Use cash and your privacy is maintained. The upshot? Cash is special because while it is issued by the state, it also allows us, as a recent report from Cash Matters ( put it, "to create a space outside the state". Let's hang on to it.

Now might be a good time to suggest you turn to our cover story. You could argue that holding gold also lets you create a space for yourself outside the state. It's been the go-to currency for all nervous investors every time the political and financial environments start to look more volatile than usual. Is now one of those times?

I think everyone should hold some gold as portfolio insurance. It might not make your fortune but it is very unlikely ever to be valueless unlike the likes of Thomas Cook. Matthew Partridge gives us a run down of what went wrong here (it looks like the usual debt and dodgy accounting).

Finally, Japan. You'll be bored with us liking Japanese equities given that we have done so for (I think) 18 years. But it hasn't been an awful call: the Topix is up around 50% since then; the best funds have made you many hundreds of per cent in the last ten years; and with dividends rising and merger activity picking up, there might be real momentum behind the market. My own portfolio certainly hopes there is.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.