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As we digitise our lives and businesses pell-mell, we are going to have to find answers to some awkward philosophical questions that don’t bother many of us at the moment. Such as – who will the final central bank be – an actual banker or a government bureaucrat? Can do without counterfeiters? And why can’t I choose to make that $120,000 car purchase in good-old soiled bank notes taken from my lifetime’s savings under my mattress?

A friend of mine inherited a small house from his uncle. He sold it and immediately his bank – with which he had had an otherwise happy 30-year relationship – froze his account and demanded to know where the large sum of money in his account was from. He refused to tell them on privacy grounds. They hounded him so much he took all of his funds (and his company’s money) out of this High Street bank and opened an account with Coutts, bankers to HRH. They assured him they would never ask where he got his money from – that would be a vulgar impertinence. #

Born in the USA

It was the USA which started downsizing the face values of dollars in the 1970s as it waged its first war on drugs. Every subsequent war on anything from drugs to Furbies is presaged with a warning on the need to stamp out money laundering and the denominations on our notes get smaller and smaller.

Even though the US Federal Reserve has devalued the dollar over 80% since 1969, it still will not issue notes larger than $100 – in a country which once boasted a $10,000 note. This makes it very difficult to use cash for large transactions, which forces people to use electronic payment methods. And that is its purpose – to track all of our transactions and allow Google and Facebook to make wads of cash selling our data.

But it is not the mighty USA which is winning the mad dash towards a cashless society – it is a little Nordic country called Sweden. Sweden is now famous for more than alcoholic CEOs* and Abba.

Sweden’s supply of physical currency has dropped over 50% in six years. Many Swedish banks no longer carry cash. Virtually all Swedes pay for newspapers, sweets, and coffee electronically. Homeless street vendors use mobile card readers.

And this is where it gets interesting. An increasing number of government restrictions are making sure that the Swedes are happy to be cashless. The excuses from the bureaucrats are familiar… fighting terrorism, money laundering, making criminal transactions more difficult, etc. In effect, these restrictions make it inconvenient to use cash, so people don’t.

Renting the vaults that make you poor

The other sting in the tail is negative interest rates – where the user of the bank has to pay for the privilege of depositing money in the bank – surely the most perverse upending of the movement of market forces by technology. With cash, you can decide to leave your stash under the mattress. As Denmark, Sweden and Switzerland all have negative interest rates and are all in the advance guard in the use of digital currencies that should worry us.

If there is a Nordic push towards stimulating spending by making it punitive to save, then I’m worried even more. I want the choice to do with my money what I want, and I don’t want every penny I spend being logged and making money for the Google’s of the world as tiny bites in the big data picture.

Full digitisation of currency would put the counterfeiters out of business but only on the surface. It would mean that only the hugely rich and the hugely powerful can create or take away our money.  Or print it.

* Ingvar Feodor Kamprad ex-CEO of IKEA and self-confessed alcoholic. Stood down as CEO in 2013.

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