The “City Letter” succeeds the “Brexit Letter”. Written from London, this bi-monthly economic and financial column covers European, American and emerging country news, as well as trends in international business life.

In Notting Hill, “zero cash” is everywhere. The digitization of money is sweeping with large jets of chromo on the "village" of West London where it is necessary to be, that of stars, design and fashion. The explosion of digital payment is omnipresent in this chic, good-natured oasis. In the windows of the shops immortalized in the cinema by the idyll between Hugh Grant and Julia Roberts, the watchword is unanimous: “No cash” or “Card only”.

The Bayswater Road Organic Market refuses cold hard cash. St John Temple Church accepts digital donations via a smartphone app. The local branch of the NatWest bank has removed one of its two ATMs, for lack of customers. Newsagents, fruit and vegetable stalls on Portobello Road and beggars are still resisting the steamroller of the bank card, the new queen of payments, but for how long?

A real revolution

As the example of Notting Hill shows, covid has accentuated the growing use of dematerialized payments to the detriment of the circulation of cash. Some are now betting on the eventual disappearance of the fiduciary. The eclipse of banknotes and coins, which have dominated commercial exchanges for twenty-eight centuries (and four centuries for banknotes), is more than an economic-societal evolution. This is a real revolution.

All over the world, payment applications are enjoying great success.

The European Central Bank is studying the issuance of a digital euro alongside cash. China is very active on the front of digital payments by app on mobile with facial recognition test. In Sweden, the Riksbank is considering the launch of an e-crown. A Pacific microstate, the Marshall Islands is developing a digital currency. Facebook is developing a private cryptocurrency called Libra. Finally, on January 2, 2021, “bitcoin” exceeded the 30,000 dollar mark for the first time. The rise of this asset with sudden price movements illustrates the growing distrust of savers with regard to currencies managed by States over-indebted by the health crisis. And Belgium is no exception to this phenomenon.

In addition, the difficulties of historical banknote manufacturing brands underline the impact of a global upheaval. Renowned companies linked to the creation of cash, such as De La Rue (printing of banknotes issued by 140 central banks) or Sicpa (supply of inks) have had to diversify dare-dare in the tracing of goods or in the management heritage.

A dynamic that will increase

There is no doubt that the dynamics of dematerialized payments will increase. The advantages – simplified transactions, hygiene, the fight against tax evasion, fraud and black money – are all advantages.

In this picture, however, not everything is uniformly rosy. Zero cash raises prudential and regulatory issues for central banks charged with ensuring financial stability and consumer protection. The digitization of means of payment that ignore borders is fragmenting the monetary system, with all the dangers that ensue. Furthermore, the currency is a strong symbol of national (or European in the case of the euro zone) sovereignty.

In addition, the protection of individual freedoms is on the agenda in the context of digitization which allows authorities and sellers to trace all the payments and purchasing behavior of the citizen consumer. This is an important question at a time of debate on the protection of personal data.

Added to this are the threats of cyber-attacks, power outages, IT glitches, and large-scale scams. Hidden and illegal sites on the "dark web" are an area of opaque exchanges where all shots are allowed.

The flip side

Like any innovative activity, the vertiginous transformation of the payments industry has its reverse side. The elderly, disabled, immigrants… the most precarious social categories are the losers of the species disappearance movement.

Thus, Sweden is the most advanced country in Europe in terms of the transition to electronic payments. But to help those marginalized by digitalization, the Stockholm government did an about-face last year by requiring banks to provide cash within a 25 kilometer radius. Quite a symbol!

"There are only three real flows in the world, noted the late Commander Cousteau: the sea, the air and the money". The deep sea star was wrong. The proof of the danger of the cashless society is that the leaching of liquid is in decline. According to a recent report by the Financial Action Task Force, money laundering has shifted from illicit money to commodities. Under and over-invoicing, phantom shipments, falsification of description or weights and measures etc: to listen to the intergovernmental body for the fight against the recycling of dirty funds and the financing of terrorism, drug cartels and other mafias have thrown their focus on exports of durable goods. Starting with fruits and vegetables, luxury cars and watches and medicines.