If the crisis generated by the coronavirus pandemic has shown something, it is the increase in payments by electronic means. It has been a way of avoiding touching something very contaminated such as coins and bills. But the disappearance of physical money is still a chimera in countries like ours. However, are we close to seeing tangible money transactions? Is there a close case?
Nigerian reality, win the cash
Our country still likes to use cash payment as the preferred means , although the situation has changed in a few years. Now it is very common to make electronic payments. And find small shops where you can buy items and pay for them with a card without the need for a minimum amount. But in Nigeria 91 percent of consumers pay for purchases under 50 euros in cash. We end up resisting using electronic payment, something that increases in older people.
But the disappearance of physical money may be a reality in the medium term. In neighboring countries such as Denmark or Sweden, both outside the euro, cash payments have greatly limited. For example, in the nation of the little mermaid sculpture, of less than 6 million inhabitants, it is no longer possible to pay cash at a restaurant or gas station. They plan the disappearance of physical money in a relatively short period of time, a few months. Sweden is in the same position, and the circulation of coins and banknotes is only 3 percent. Curious case in a country that was the first on the old continent to adopt paper money, in 1661.
But the Spanish case is different, we are a country of 47 million inhabitants and belonging to the Euro environment; just like France or Germany. The disappearance of physical money is not impossible , in fact it is technically perfectly feasible. But it is unlikely that a country in the euro environment would take that step alone without its partners. If done, it should be in a joint action by all the countries of the euro zone.
The challenges of the disappearance of physical money
Stopping the coins and bills would no doubt have an immediate effect. Tax fraud and the black economy would largely disappear. The audit would allow states to collect more and have greater control over monetary flows. However, one of the most pressing challenges would be security. As these are fully electronic transactions, the system should be strengthened in such a way that it is robust against cyberattacks.
Perhaps cryptocurrencies , another way to trade with unconventional money; They could help with their experience that physical money took the path of disappearing after more than two thousand years with us. That we stop using coins and bills will end up being a reality. But there will still be at least a couple of decades for this to be a tangible reality. There are still many loose ends to be tied and important agreements reached before the disappearance of physical money becomes a reality.