Currency and Coins will be replaced by Electronic system-What do you think?

Question

Eventually currency in the form of coins and paper wil be completely replaced by the electronic systems of transferring money". To hwat extnet is this true and what will be the advanctages and disadvantages?
I need to give a presentation in one of the prestigious institution for my MBA entry. what is your opinion in this issue. please help me out in this issue?

Answer 1

I always give long answers, so get ready. First, before looking at coins, look at the evolution of money over time. First there was the barter system, in which we traded goods for other goods. After some time passed people realized that it was more efficient to trade with a common coin. By giving something a standard of value against which all good could be measured, we could have more efficient trade. No longer would a man trying to trade his goat have to find another man willing to buy the goat for the sugar the man with the goat wanted. each man could trade their goods for a coin and then give that coin to someone else in return for what they needed. but this coin system was not completely based on faith, that is people thought that if a standard were to be used, then the coin that was given as value had to actually be worth something in and of itself. hence coins were usually made of gold or silver and often continued to circulate only in the upper levels of society that could afford to trade in coin. however over time people and lenders figured out that the coins did not need to have inherent value, that as long as people generally agreed on a coins value as a currency it did not matter what the coin was made of. This breakthrough in monetary policy allowed governments to borrow, for lenders to give loans that were larger then its holdings, and a great manyo ther things. Today the switch to electronic money represents a further evolution of monetary policy. Just like all past evolutions, the acceptance of the system of trade will be based on acceptance (faith) in the mode of trade as well as in its effiency.
The faith in electronic systems is already well established. credi card companies have been providing electronic money to us as consumers for two decades now, and the system of credit-lending has only gotten more powerful. What a pure electronic system would do is further the efficiency of the system. think of it this way. if you hold a dollar in your wallet, it is not earning interest, it is not working for you. Nor is it safe in the way money in a bank is safe. A person may steal your wallet or you may lose it. electronic money makes these probems less likely. First of all, by having all currency stored as electronic date, every dollar in the account will be earning interest until the very moment that it is used to buy something. what this means is that people/businesses can maximize the value of their money. Secondly, by not having to carry the money the risk of losing it is eliminated. So electronic money both increases efficiency as well as eliminates the risks associated with any physical object of value (primarily the risk of its loss or destruction).
Electronic money however creates new risks as well. Computer errors may cause money to "disapear" since it has no physical existence. Also hackers may gain access to accounts which may lead to losses. However such problems are likely to decrease with time is biometric protections and other safeguards are integrated in trade. So for example in the near future a retna scan might be used to identify the holder of the account, and therefore the only one who would be able to gain access to the funds would be the original account holder.

The bottom line is that electronic systems increase efficiency and decrease risk in trade. They also create new issues of privacy and security. Whether such systems develop or not is not likely an issue of contention, they already exist, the only question is how long it will be before all paper currency is comepletely eliminated.

Answer 2

I like the idea of currency you can pay as and when you want and also know you can afford it. If we resort to credit / bank cards only some may spend more money than should. I know some of the major stores where I live have started to refuse cheques and will only take cash or cards so that change has started already.
Some have never had a bank account and like to have their small amount of money in "real cash". But yes I dont think it will be long before we end up in a cash and paper less financial situation.

Answer 3

The notion of an electronic-only monetary system may have some good points but I will point out two flaws to consider in such a shift.

1) There will be a certain percentage of people whom for reasons like poverty or refusal, will not participate. This will cause a class division which will be difficult to ignore or overcome.

2) System failures or intrusions could have both short and long-term impacts on the economies of the entire globe.

Answer 4

Technically possible, but in reality a long way off.

What if I want to give a friend a few quid? What about a bit of part time work as a one off?

People are hugely attached to having money in their pockets to do with what they will - and there are still millions of occasions where electronic transfer won't cut it.

In the future I think much more will be electronic transfer, but I think the focus will be on making that easier rather than removing cash entirely. Certainly I don't expect in to happen in my childrens lifetime, and he's only 7!

Answer 5

It is true that the world economy is increasingly tending towards a cashless society as raw cash is replaced by the electronic purse. This follows the natural succession of things. Remember that cash in its present form replaced other means of payment.

however, one thing is certain and that is that value will still be determined in terms of the name of the currencies.

The advantages are obvious as it protects value from being easily lost, transactions become easier and quicker, enables speedy transfer of funds etc while the disadv is that its not universally accepted.

Answer 6

10% of people in the UK were victims of online fraud last year therefore it seems that electronic payment systems overall are far from secure, in many cases they make identitiy theft very east and as such there will always be a cautious group of people who wish to hand over or receive cash at the end of any transaction.

Apart from that don't you find it so annoying, waiting in line at the supermarket while some pedantic soul decides to pay for a botrtle of milk on his credit card when he could do it with cash in a moment.

Answer 7

I think its a great idea but the obvious problems are

Fraud will be too great as money can be taken from anywhere and created anywhere as it is only virtual, whereas money is a physical thing which you can hold so it can only be taken from you physicaly which is far easier and less complex to stop

Good thing is the fact that we dont have to worry about physical robbery of money like street crime.

There maybe other points but getting tired now

Answer 8

In theory a great idea.

However, Americans need the psychology of holding a greenback in their hands.

This is also why dollar coins never work. As long as the Government offers the paper, then it will always rule.

Plus, a cash society permits anonymity.

Answer 9

I say, it's about time! (Ya know, last I heard, it costs more than a cent to make a penny!) I only fear the problem(s) of identity thefts with the electronic means of transferring "money" (or goods, property, worth, or what-have-you or whatcha-may-callit or whatever the concept may eventually turn out to be...)

Answer 10

well, no one knows if it'll happen or not cause it's in the FUTURE. i don't think they will use an electronic system because if it goes down (virus, power shortage, etc) then the whole world would be thrown into chaos. it's not very reliable is what i'm saying.