In the face of evolving payment technologies, cash—in the form of banknotes and coins—continues to hold its ground and will not be disappearing anytime soon, according to Jennifer Adam, the curator of “The Future of Money” exhibition, which opened this Wednesday at the Bank of England Museum in London.
The exhibition showcases, among other things, the new banknotes featuring the portrait of King Charles III, set to enter circulation in June, and a section dedicated to the potential introduction of a digital pound. Despite a notable decline in cash transactions in the UK—from 55% in 2011 to 15% in 2021, with projections suggesting a further drop to 6% by 2031—Adam emphasizes the enduring necessity of physical money.
“Cash has a future,” Adam asserts, pointing out that approximately 15% of transactions are still conducted in cash, and one in five people express a preference for it. For many, cash remains a vital financial management tool, offering easier tracking of expenditures. Furthermore, it serves an essential role for the approximately 2.1% of the UK population, or 1.1 million adults, who lack bank accounts or access to digital payments.
Adam also highlights privacy protection and security as reasons why some people favor cash. Despite stringent regulations and penalties for unauthorized data use in the UK, cash transactions afford a higher level of anonymity. She notes that data protection concerns will be central to any Bank of England decisions regarding the introduction of a digital pound, intended to coexist with traditional currency forms.
While Adam refrains from commenting on El Salvador’s unique adoption of Bitcoin as legal tender in 2021, she acknowledges the impact of cryptocurrencies on central banks’ and governments’ outlooks on future monetary needs. “Cryptocurrencies have shifted the way central banks and governments think about future monetary requirements. It’s unlikely that most governments will adopt existing cryptocurrencies, but their emergence has prompted central banks to explore developing Central Bank Digital Currencies (CBDCs),” she explains.
Adam distinguishes between cryptocurrencies and CBDCs by highlighting the security of assets based on their issuer. Unlike cryptocurrencies, which are created by private entities without regulations for asset recovery in case of failure, CBDCs would be issued and regulated by central banks, ensuring their value and guarantee by institutions like the Bank of England.