Friday, 22 March 2013

Cyprus and the future of physical cash

For years, it has been ostensibly the considered opinion that the future of money lies in the gradual but inevitable march towards electronic and intangible money. Clearly, this is a poor omen for the amateur coin collector who usually begins his hobby career with the gathering, collecting and organising of the coins he finds in his change.

Recent events in Cyprus have raised doubts in my head whether this is quite so inevitable. Let me explain. The cypriot economy is in trouble, they must raise something in the order £5,000,000,000 in the next week or so, otherwise they will not receive the £9,000,000,000 or so in emergency funding to their banks that they so badly need in order to prevent their collapse. Despite an apparent reprieve earlier in the week, it seems again that the depositors in Cyprus' banks are going to have stump up some of their savings to contribute to this sum.

Consequently, savers have been doing their level best to withdraw as much cash as they can and reduce the amount the government can take. Even some large supermarkets are reported to be forced by their suppliers to buy in stock with physical cash - unheard of normally! Cyprus has essentially been rapidly moving towards a cash economy. One is left wondering if this is a blip or an indicator of things to come in the wider European or even world economy. If it is a sign of things to come, then as horrendous as it is for the economy at large, it should at least mean more coins are around again!

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