{"id":6213,"date":"2021-03-09T18:20:21","date_gmt":"2021-03-09T18:20:21","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=6213"},"modified":"2021-03-22T18:19:29","modified_gmt":"2021-03-22T18:19:29","slug":"back-to-the-future-with-digital-money","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2021\/03\/09\/back-to-the-future-with-digital-money\/","title":{"rendered":"Back to the future with digital money"},"content":{"rendered":"

According to Dr. Franklin Noll, our digital money future will look a lot like the past: we are heading back to a time when humans had to juggle between many different forms of currency.<\/p>\n

Noll, our guest on the latest New Money Review<\/em> podcast<\/a>, is a historian who specialises in the technology of money\u2014ranging from banknotes to cryptocurrency. As a consultant, his clients include the US Treasury, the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the International Monetary Fund.<\/p>\n

\"\"<\/p>\n

Franklin Noll<\/em><\/p>\n

\u201cOur recent history, where you only have one kind of currency, is kind of an aberration,\u201d Noll says in the podcast.<\/p>\n

\u201cIf you go back to colonial-era Massachusetts, you\u2019d be dealing with pounds sterling, local Massachusetts pounds, stuff from other colonies, native American wampum and Spanish reals. You\u2019d be juggling all this money.\u201d<\/p>\n

We should all prepare ourselves for a repeat of this complexity, says Noll.<\/p>\n

\u201cIn the future, we\u2019ll have a lot of co-circulating currencies,\u201d he says in the podcast.<\/p>\n

But we\u2019ll have some help from technology, he suggests.<\/p>\n

\u201cWe\u2019ll have an app on our phone that will carry our different wallets and do the conversions. When we want to make a payment, our AI will see which is the most efficient way to make it.\u201d<\/p>\n

But despite the rise of digital payments, mobile money hasn\u2019t taken over completely from banknotes yet. In the podcast, Noll predicts that cash will be around for a few decades more.<\/p>\n

\u201cBanknotes have a lot of tenacity,\u201d he says.<\/p>\n

\u201cPeople have been predicting the end of banknotes since the 1960s, but they\u2019re still here and people are using more of them than before. My guess is that banknotes, in some form, will still be around for a generation yet.\u201d<\/p>\n

According to Noll, banknotes could be made \u2018smart\u2019 in future by embedding technology that links them to an electronic network, perhaps the network underlying a central bank digital currency (CBDC).<\/p>\n

Such crypto-notes would be a physical token of the CBDC, says Noll, and could function as a transitional element between the cash we have now and a future, purely electronic form of money.<\/p>\n

Smart banknotes could even be designed to embed a \u2018carry tax\u2019, says Noll. This would force them to depreciate in value over time. Such a design feature might suit a central bank wanting to impose a negative interest rate policy, he says.<\/p>\n

Listen to the podcast<\/a> to hear Noll and New Money Review<\/em> editor Paul Amery discuss:<\/p>\n