Money – Options and Possibilities

Over the next decade, the technology timeline is one of the most predictable components of the Future Agenda for money. As William Gibson commented in 1999, “the future is already here, it’s just unevenly distributed.” All of the technologies that will make a difference to any organisation’s business model in 2020 already exist. The right way to get ahead of the curve is not to try and imagine amazing new technologies from scratch but to simply look at how technologies are moving from the lab into the world and consider their impact in a reasonable structured way.

New technologies that will be moving into the mainstream of money, payments and banking over the next ten years include; connection technologies such as speech recognition, near field communication, 4G mobile networks and powered tags; disconnection technologies such as smart cards, voice authentication, face recognition and identity cards; and processing technologies such as the semantic web, contextual computing, autonomous agents, printed batteries and virtual worlds. Of these, I see that it will be the disconnection technologies that will shape the emerging value network. Therefore small improvements in these technologies will have a major impact on money.

Unlike the technological view, the social and economic pressures on money are much harder to determine. If the average person in the street thinks that their government is printing money round the clock so that it will inevitably lose value, then they would naturally want to hold gold or some other asset they think might hold its value against inflation. This does not mean using real gold as a means of exchange but as a store of value. I could envisage, for example, having a gold account. I would still draw cash out of the ATM – but only enough to support transactions. Gold would be the store of value and, as a consequence reduce the demand for currency as a store of value. Is digital gold the future? Will the Islamic market be a driver for electronic gold? A non-interest bearing 100% gold-backed electronic currency would be attractive to many in times of economic uncertainty. While the return to the gold standard may be impractical or even undesirable, the idea of a new technology monetising the store of value that is gold is a different proposition. For the ordinary person to be able to decide to hold Euros, gold or mobile phone minutes simply by choosing a different menu on their phone does provide practical choice. However, given free choice, would people opt for dollars over precious metal?

Perhaps people would prefer to use more regional, local or even personal currencies. The next generation of money may be more about so called ‘alternative currency’ rather than a return to the money of the past. Local currencies have been attracting a lot of attention and there is history in this space ranging from Local Exchange Trading Systems, frequently derided as ‘babysitting tokens’, to Time Banks and so on. In London another such currency has just been launched – the BrixtonPound. If regional, local or personal currencies are to disrupt the financial system they need to include an alternative means of saving and lending, not merely spending. A combination of P2P (peer-to-peer) currency and P2P lending could very well deliver the key elements of new kind of money. One factor nudging me towards this is the demonstrable collapse in the trust of traditional banks: Many members of the public, whether through financial calculation or outrage, are now prepared to give alternatives a try. In the UK, one such alternative of note is Zopa, the peer to peer lending exchange.

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