Last week I left home without my wallet. I soon realised it did not really matter. I could even manage without a plastic card. My phone can summon and pay for a taxi, buy a cup of coffee and purchase a train ticket. This year the proportion of transactions in Britain made in cash is likely to fall below 50 per cent. Since cash is mainly used for low-value transactions, cards and electronic payment account for most of the value of payments.
Andrew Haldane, chief economist at the Bank of England, speculated last week about a cashless future. And yet cash in circulation has generally been increasing more rapidly than national income. The total volume of notes in issue is equivalent to £1,000 for every man, woman and child in Britain. The US figure is more than $2,000. And the quantity of euros in issue has expanded threefold since the single currency was established.
John Kay is Visiting Professor of Economics at the London School of Economics and a regular columnist for the Financial Times.