The UN is playing a prominent role in the drive to create a global cashless society. Today we look at the positive side of the ‘cashless world’ argument to see who the winners of a coinless future might be.
Who’s Involved in the Cashless Initiative, and What Are Their Aims?
The initiative, called the United Nations Capital Development Fund’s Better Than Cash Alliance, is backed by the UN, governments, companies and international organisations. The programme aims to “accelerate the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.”
The partnership will reduce poverty and drive inclusion through three principal channels: 1) advocating for the transition from cash to digital payments, 2) conducting research to inform strategies for the transition, and 3) catalysing the development of inclusive digital payments ecosystems to reduce costs, increase transparency, advance financial inclusion and drive inclusive growth.
What Are Potential Positives?
Unpicking this argument will require us to look at several potential effects of a cashless society; we will begin by discussing how, according to the Better Than Cash Alliance, a cashless society can eliminate poverty.
The benefits of the formal financial system are taken for granted by the vast majority of the developed world; indeed, access to a secure place in which to store money is as much of a right as access to clean drinking water, shelter and the right to vote for many from the developed world. However, for an estimated 2 billion people around the world, there is no way to access the services of the formal banking sector. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance, said:
“This makes it extremely difficult for them to invest in their future, provide for their family’s health and education, or build a business. The only way they can make or receive payments is by cash. This is unsafe and inconvenient. It also lacks transparency for governments, companies and the individuals themselves.”
Ms Goodwin-Groen went on to say that women have the most to gain from the UN’s initiative, citing increases in control over family finances, personal security, as well as improving the climate for financial opportunity and stability. Melinda Gates, Co-Chair of the Bill & Melinda Gates Foundation, also said:
“When the government deposits social welfare payments or other subsidies directly into women’s digital bank accounts, the impact is amazing. Women gain decision-making power in their homes, and with more financial tools at their disposal, they invest in their families’ prosperity and help drive broad economic growth.”
Alongside gender equality, those using banks also stand to benefit from saving both money and time. By removing the need to travel potentially long distances to access ATMs or make direct cash transactions, users will have more time to earn and improve their quality of life.
Cash payments run the risk of not incorporating the taxes and charges imposed by governments that pay for publicly funded infrastructures. The ability to track payments may play a significant role in stemming the flow of so-called ‘black money’. In a cashless world, transparency and accountability are easier to trace, and its introduction, therefore, would notably diminish the impact of corruption and tax avoidance on poorer countries. Likewise, some petty crimes, like theft, also become significantly more difficult in a cashless world.
While far from extensive, above we have covered some of the main positives that could arrive thanks to a cashless society. Join us next time where we will be discussing the negatives of a cashless society.
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