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The Future of Money: Banknotes and Coins

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The Future of Money: Banknotes and Coins
A stack of euro coins A stack of euro coins

Throughout the modern era (roughly since gold and silver specie ceased to be used as circulating currency), coins and banknotes have been the fiat tokens we use to represent money. However, like the rest of our society, the financial system has undergone a rapid transformation in the Digital Age.

Are We Nearing "Peak Cash"?

A "worldwide authority" on the printing industry, the British firm Smithers Pira, conducted a study that forecasts a 5% growth rate for the global supply of banknotes over the next decade. By 2026, says Smithers Pira, the world will be flush with nearly 1 trillion banknotes (943 billion) and 179 billion coins.

euro-printing-pressThe study notes that some cultures are more inclined toward using physical cash (like the Germans) whereas others have adopted electronic forms of currency far more readily. While the global supply of banknotes and coins is projected to grow over the next ten years (by 0.5% annually on average), the report also indicated that this may be the threshold for how many physical tokens can circulate. In all of the decades of experimenting with a fully fiat money system, the supply of cash has obviously never been higher in the past.

However, one can also imagine a future in which coins and paper money are disappearing. In many countries where the stability of banks is an issue, people often lack access to a sufficient amount of hard currency just to manage daily life.

The Death of Cash

This begs the question: Will all money be digital someday?

Source: Source:

The central banks of both European (the ECB) and Argentina have recently unveiled initiatives to remove the largest denomination banknotes from circulation and end their regular production. In Argentina, ATMs are frequently out of larger bills. Poorer citizens who don't conduct a great deal of electronic transactions (such as with a debit card or credit card) are especially disadvantaged by this scarcity of cash.

Source: Wall Street Journal Source: Wall Street Journal

The ECB and others have argued that getting rid of large banknotes like the €500 note will help curb large money laundering operations and deter other criminal transactions that are settled in physical cash. However, this slippery-slope argument is generally used against all forms of alternative currency. Eventually, it seems the logical conclusion of policies like the elimination of larger denomination banknotes will lead to the abolition of cash altogether.

The Smithers Pira study notwithstanding, it appears that the financial system is charting a path toward fully digitized currency at some point down the road. Although it's not going to happen in the next five or ten years, these kinds of steps are being taken in the meantime that will gradually bring a cashless future closer and closer into focus.

In an age where money and currency are tethered to nothing but the whims of central banks, only gold and silver offer the kind of store of value that is required for long-term fiscal prudence.


The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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