Is the world ready to abandon cash?
In a recent report, the International Monetary Fund raised the issue of abolishing cash. The document did not contain any instructions regarding the matter, but recommended establishing economic incentives to cut the use of cash in various operations.
Pravda.Ru turned to chairman of the State Duma Committee for the Financial Market, Anatoly Aksakov, in an attempt to find out whether it can be possible to refuse from the use of cash completely.
"The IMF has prepared a working paper about the move to abolish cash. The document does not recommend eliminating cash completely. However, an increasing amount of governments around the world insist on measures that should be taken to refuse from the use of cash under the pretext of the struggle against terrorism. How do you think Russia should approach the issue? Is Russia ready to bid farewell to cash?"
"I believe that it is not practical to solve this issue administratively, but one should stimulate this process. This is beneficial to the state, because it reduces costs for the production of cash, its transportation and disposal. This is beneficial to banks, because they will have more funds on their clients' accounts, so banks will be able to use these funds to give credits to economy and the population. To crown it all, it is beneficial to people. After all, non-cash payments are more convenient.
"The state should stimulate the use of terminals and other devices, with the help of which it could be possible to make non-cash payments for goods and services. Security, of course, is highly important. Many are afraid to use payment cards for security reasons.
"In today's Russia, payment cards are used in nearly 50 percent of all operations, in which people pay for goods and services. We continue the process to introduce the national payment system, "Mir," whereas the national payment card system offers a variety of loyalty programs. These programs will engage people's interest to save money, and they will be gradually switching to cards instead of cash."
"When is the world going to abandon cash?"
"It will take some ten more years. There are countries, where the process develops speedily - the Scandinavian countries, for example. They have reduced the use of cash to the minimum. They pay by card to buy newspapers."
Pravda.Ru also asked an expert opinion on the subject from Nikita Maslennikov, the chief of Finance and Economics at INSOR.
"I think that rumours about total refusal of the world from cash are exaggerated. No serious economist considers the question of abandoning cash for good. Nevertheless, there is such a trend in the world, definitely. It is not associated with only money-laundering or the funding of international terrorism. Primarily, the trend to abandon cash is based on the development of financial payment and settlement technologies in the modern world.
"The popularity of contactless payments, mobile banking, Internet banking, mobile applications has been growing very fast all over the world. All this has been developing rapidly. Naturally, all these innovations create an impression that the trend with electronic money is gaining momentum. The process may take an explosive character and develop even faster.
"In Russia, the share of cash still remains high. This problem is not new - it goes back to 2008-2009, when analysts said that if we had had a smaller share of cash, we would not have had to spend so much on the support of the banking system."
"Non-cash circulation either accompanies or allows to create additional liquidity of the banking system. This is a very important thing that retains its significance. There are global trends, but there is also a need to be more careful about the assets that can be used to manage the liquidity of the banking system."
"What is the danger of switching to non-cash payments? How can Russia suffer from this?"
"Hacker attacks is the biggest problem. Consumers of financial services are largely unarmed due to their financial illiteracy. If we feel bad, we go to see a doctor - everyone knows that. One should have a similar rule for personal finances, but we lag behind other countries. We may not even see what risks certain financial symptoms are indicating for us. Financial health depends a lot on how we read documents written in small print. Every person must monitor their personal finances daily. Lack of knowledge in this field may lead to serious problems. Hackers is a big problem, but it will always exist. We should educate ourselves to feel secure financially."
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