Governments don’t need to ban cash, we’ll all just stop using it

A lot of people worry that central banks and governments will ban cash. But they may not need to, says Merryn Somerset Webb. We might just decide to do without it.


Here at MoneyWeek we worry that at some point in the next decade the world's central banks will cement their control over us all by banning cash, something that would make their jobs as monetary policy makers a whole lot easier (see all of our past columns and blogs on the matter).

However, Andy Haldane, chief economist at the Bank of England, told me last year that I didn't need to worry about cash being banned. He doesn't think it will be necessary.

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Why? Because we will stop using cash all by ourselves. Using cards or phones is so much easier than using cash (particularly now contactless has taken off). I didn't buy this at the time (using cash is the only way to hang on to any privacy these days). But a small article on page two of The Times today makes me wonder.

At the moment, most cash machines don't charge when you withdraw cash, thanks to the Link network, which connects some 70,000 machines around the country and creates a mechanism for its 39 members to pay for using each others' machines. Unfortunately this isn't working for everyone: some members and "particularly those operating in rural areas" say that these payments just don't cover their costs.

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Link members are meeting this week to have a row about the whole thing. But if they don't work it out, there is a strong chance that you will soon have to pay a fee when you use an ATM (think £1.80 to £2.50). If that happens, and using a card then looks firmly cheaper than using cash, would you use less cash? I suspect you would.

So there you have it. Haldane might never have to actually lobby to ban cash. We will just stop using it all by ourselves giving up our financial freedom and our privacy as we do.




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