Should We Get Rid of Paper Money?

Here’s a riddle: I was invented more than 1,000 years ago. I can be germier than a toilet seat. At least two countries are trying to get rid of me forever.

What am I?

Paper money!

For centuries, people around the world have used paper money and coins—cash, in other words—to buy stuff. But now, technology has made it possible to get just about anything you want without ever touching a dollar, quarter, or nickel. We can shop online and in stores with credit cards and debit cards and apps on our phones.

“Within 10 years, cash will seem old-fashioned,” predicts Susan Crawford, a technology expert at Harvard University.

Indeed, Amazon, Shake Shack, and Starbucks are among the many businesses experimenting with going cashless. Even entire countries, like Sweden and South Korea, are getting rid of cash.

But the cashless trend has sparked a debate. While it offers many exciting opportunities, getting rid of cash has some serious drawbacks too.

Paper money was invented in China in the 7th century. At the time, it offered revolutionary convenience. Instead of lugging around heavy gold coins or something to trade—a fur pelt, say, or a few chickens—all you needed were a few lightweight slips of paper.

Today, however, cash can seem like a hassle. Standing in line counting out bills and coins can take forever. Why bother when you could snag that burrito with the tap of a finger? And if you lose your cash? It’s probably gone forever. With digital transactions, money is better protected. No wonder nearly half of Americans would rather use apps than cash.*

Moreover, producing money takes a lot of, well, money. Right now, about 45 billion bills are in use in the U.S. Over time, they get damaged and must be replaced. Last year, the U.S. set aside nearly $900 million for printing new currency. Doesn’t that seem like a waste?

_{*2017 survey by U.S. Bank}

This article was originally published in the February 2021 issue.