Your Bank Account Might Already Be Obsolete

Added: 2026-05-28

[00:00:00]Hey team, what comes after money? The future of currency, the end of cash is already here. This is the chapter your textbook hasn't written yet. Stay with us. Like, comment, subscribe. Let's have a look. Right, in Kenya, millions of people who've never held a bank account, they send money, they pay for groceries using a mobile payment system called M-Pesa. No bank branch required. No credit history needed, just a SIM card.

[00:00:32]In China, cash is effectively dead.

[00:00:36]WeChat Pay and Alipay process tens of trillions of yuan annually. And the government can actually see every single transaction in real time.

[00:00:48]In Sweden, some churches have installed contactless card readers for donations because too few people actually carry cash anymore to bother with collection plates.

[00:01:02]And central banks all around the world, including the Reserve Bank of New Zealand, the Bank of England, the European Central Bank, and the US Fed, are effectively and actively investigating developing something called central bank digital currencies.

[00:01:21]Maybe that's the future.

[00:01:22]Government-issued digital money. It could represent the most significant transformation of money since paper replaced gold.

[00:01:31]The history of money isn't done, but we are living through its next chapter. I'm Econ Teaching Z. This is the final video of our money system series. We're going to be thinking like economists about what is coming next. We're going to use the frameworks that we've built across these last five videos. Let's have a closer look at the death of cash.

[00:01:55]What's already happened? Let's have a look. Okay. So, very simply, cash use has been declining across multiple countries. We've seen this. We know this. Okay? It has been declining for over a decade in most of the advanced economies.

[00:02:12]But, the decline accelerated sharply during COVID times.

[00:02:17]Contactless payments became the default almost overnight. QR codes replacing physical menus. The pandemic ran a global real-world experiment in cashless society, and most people didn't revert afterwards.

[00:02:35]In New Zealand, cash transactions fell dramatically during that COVID period and still haven't recovered.

[00:02:42]There are similar patterns that have been noted in Australia, the UK, Canada, and across Scandinavia.

[00:02:49]But, here's where systems thinking questions that.

[00:02:53]Who are the ones who lose out when cash disappears?

[00:02:59]What about elderly people with a lower digital literacy level? What about the people without the smartphones or without reliable internet access? In the UK, you're still looking at 1.2 million adults who remain unbanked.

[00:03:14]They might be undocumented workers.

[00:03:17]What about the small businesses that operate with significant cash revenue?

[00:03:22]Or people who are in situations where they need financial control.

[00:03:27]They need anonymity to the transactions in order to maintain perhaps their safety.

[00:03:33]Cash is anonymous.

[00:03:35]Every digital payment is a data point.

[00:03:38]The shift from physical cash to digital money isn't merely a convenience.

[00:03:43]It is a profound change in both the surveillance capacity of both governments and private companies over you and your individual financial behavior.

[00:03:54]It is a distributional and civil liberties question, and those are the ones that are most important in our economic debates, and that's where we kind of live. That's where we in economics world, that's where we live.

[00:04:10]What are CBDCs? What are they and why do they matter? What are those central bank digital currencies? The CBDCs, what are they?

[00:04:22]All right, they tend to we tend to see them as the monetary policy story of the next decade. Every major central bank has been researching them, some piloting them.

[00:04:32]Some, like China's digital one, are actually already in significant real-world use.

[00:04:38]It is a fundamental shift, all right?

[00:04:40]Because right now, when you use your banking app, the money sitting there is technically a liability for your commercial bank, whether that's the Westpac, ANZ, Barclays, whoever.

[00:04:52]A central bank backs that system, all right? Maybe indirectly, but you're still one step removed. A CBDC changes that structure entirely. The digital dollar or a digital pound, for example, would be a direct liability of that central bank instead.

[00:05:10]Effectively, you would have a central bank account.

[00:05:14]No commercial intermediary.

[00:05:17]Maybe instant settlement. And crucially, the money would be programmable cuz it's digital.

[00:05:25]Programmable money means that the money can actually be coded with rules. If it's a stimulus payment, you could say that it's only able to be spent on food.

[00:05:35]If it's a benefit, you could say it's going to expire if it's unspent, encouraging circulation. It could be automatic tax collection at the point of transaction. You could program it so that it is carbon linked. Trying to figure out spending limits, all right?

[00:05:52]Or education, all right? The case for the CBDCs, the financial inclusion, maybe of unbanked.

[00:06:00]All right? The faster and cheaper international transactions, maybe more precise monetary policy transmission, maybe reduced fraud and evasion. The case against, and this is where it gets genuinely complicated. If the government can see and potentially control every transaction, where is your financial privacy? It effectively disappears.

[00:06:22]If a commercial bank deposits migrate to CBDCs, what happens to that bank's ability to lend? What about that entire fractional reserve system, our engine of credit creation? Will that be fundamentally disrupted?

[00:06:37]China's digital yuan is the most advanced real-world test case. The Chinese government, as said earlier, has near complete transaction visibility.

[00:06:47]Some governments are going to see that as a feature.

[00:06:51]For other governments, that is going to be a live, serious debate about the proper scope of state power over individual economic behavior.

[00:07:00]What's our exam angle? Okay? This is your case for monetary policy evolution.

[00:07:06]This is a case for financial regulation, maybe the role of those institutions, and increasingly questions about market structure and government intervention.

[00:07:17]This is going to appear on papers in the future.

[00:07:20]All right? What frameworks can we use to think about what comes next? All right?

[00:07:26]Let's have a look.

[00:07:28]Let's apply the frameworks that we've already used throughout this particular series.

[00:07:33]The first one is looking at that historical pattern, recognizing what has happened. Every money major monetary transition, barter to commodity, commodity to metallic, metallic to paper, paper to digital has created some winners and some losers. The winners are consistently those who understand the transition early. The losers are those who can't adapt or aren't given the tools to navigate it.

[00:08:02]So, we consider that. All right. What about scenario planning? We actually don't know which form of digital money is going to be dominant in 2040. It might be government CBDCs, it might be pri- private stablecoins issued by a tech company.

[00:08:18]Crypto could become a genuinely functional money. Or it might be some architecture that we haven't imagined yet.

[00:08:26]Rather than betting on one particular outcome, our rational response should be to understand the space well enough to navigate whatever emerges.

[00:08:37]Systems thinking. Remember second and third order effects of a fully cashless, fully trackable monetary system are still being worked out.

[00:08:47]What are the effects on privacy? What are the effects on the credit markets?

[00:08:52]What are the effects on the ability of citizens to conduct transactions outside of state visibility?

[00:09:00]What about the effects on the financial inclusion of citizens if the digital infrastructure is unevenly distributed?

[00:09:08]These aren't just hypothetical questions. They are live policy debates and they should be happening right now in Wellington, London, Brussels, and Washington.

[00:09:19]All right. Let's interrogate the data.

[00:09:21]When we see enthusiastic projections about the CBDCs, about how they improve financial inclusion, you do need to ask who funded the research. If you are reading alarming predictions about financial surveillance and dystopian futures, ask yourself what institutional interests are behind that framing.

[00:09:41]Both sides of this debate have got motivated actors.

[00:09:45]All right, let's close off the series now. All right, we've covered a lot of ground. All right, across all of these videos, money starting as stuff. All right, rem- remember the salt, the shells, the cattle, the grain traded across the ancient markets. We then looked at how it became a standardized metal.

[00:10:05]All right, then redeemable paper, then paper backed by nothing but institutional trust and the idea of debt and collat- collateral obligations. And now it's increasingly a number in a database heading towards something that might not look like any of these things.

[00:10:23]Governments have also in the past broken money through reckless expansion, sometimes for understandable reasons, always with devastating consequences for ordinary people and economies. Inflation that has been seen [clears throat] is not an abstraction. It is the destruction of that trust made visible.

[00:10:45]Central banks emerged from murky arrangements between the states and private capital and grew into the most consequential but unelected institutions in the modern world, justified by genuine economic logic and subject to genuine economic and democratic concerns.

[00:11:05]Crypto as a model has challenged our financial system. It has revealed how much of our money's value is social rather than physical or technical and how difficult it is to replicate that institutional trust with debt obligations from scratch.

[00:11:22]The next chapter of money is being written right now in CBDC pilot programs, cashless payment systems, and in debates about financial privacy.

[00:11:32]These haven't been resolved anywhere yet, but they need to be watched and contributed to. None of this is fully in your textbook yet. All of it connects to every model, every evaluation criteria, and every exam question going forward.

[00:11:47]All right? Because this is what money actually is and how it actually works in the world you inhabit.

[00:11:54]So, thinking about all of that, okay? Looking at the history of money, it's about trust. It's about debt and obligations.

[00:12:02]What people collectively believe in, what institutions make credible, what happens when that credibility breaks.

[00:12:12]All right? All of those things. Trust, as it turns out, is one of the most economically interesting and consequential things in the world.

[00:12:22]This is Econ Teaching Z. We had five scripts, five videos. Thank you for sticking with us. Please like, comment, subscribe. What do you think? What will money look like in 2050? Who will benefit from that transition? I genuinely want to know what this community thinks.

[00:12:40]Share this video.

[00:12:42]Subscribe.

[00:12:44]Push it out to others, people who might think that economics is just supply and demand models.

[00:12:50]All right? The real world is here. I'll see you in the next one. All right? How much are we going to see changes, all right? Maybe we can talk next time about trade. About the history of trade, about why globalization is having a midlife crisis. All right? But, in the meantime, like, comment, subscribe. Prompt, what will money look like in 2050 and who will win?

[00:13:13]Thank you very much for listening. Hey Coin Insider, have a fantastic day.