Many of you will have seen the recent announcement from the US treasury about the upcoming release of new banknotes in the 2020s. This news has attracted significant media attention – something that is somewhat unusual for a story about paper money. There have been some incredibly positive pieces in the news about the fact that, for the first time, the US will include women and black people on their notes, including Harriet Tubman, the former slave, abolitionist and suffragist, Eleanor Roosevelt, the Rev. Martin Luther King Jr. and African-American classical singer Marian Anderson.
However, more than one commentator has been quick to question the logic in this long term plan in releasing new $10, $20 and $5 notes, given there is an apparent impending ‘cashless’ economy. New banknotes entering circulation are often a sign that cash use is here to stay. A cashless society for example was much talked about in Sweden. However, the central bank there are introducing new bank notes also into circulation and interestingly the Swedish government have also subsequently put a halt to a fully cashless society, such is the importance of cash to wider financial inclusion and consumer choice.
The ‘move away from cash’ or ‘death of cash’ are frequent topics of discussion, but the reality is that the amount of currency in circulation is actually increasing. Federal Reserve data is the US reports that the 20 years to 2015 actually saw the number of bank notes in circulation more than double, reaching more than 38 billion.
Also, according to Retail Banking Research – Global ATM Market and Forecasts, in 2014, ATMs in the US enabled 5.6 billion cash withdrawals, totalling $745 billion (at an average amount of $130 per withdrawal). There are some estimates that predict this figure will actually fall in future years, but at only at a rate of less than one percent per year its impact will take hundreds of years to even be felt. It would take actually over 200 years at that rate of a slight decrease to see cash withdrawals in the US even drop below 1 billion a year!
It is impossible to predict the future, and I’m sure that we will at some point get closer to a cashless society as new technology evolves over the next 30, 40 or even 50 years. I firmly believe that people still like the convenience of cash and the flexibility it offers. So for these new banknotes I think the future is bright – I look forward to seeing and using them along with the many other payment methods available to me.