The Japanese love their cash. Cash as in physical notes and coins. Not the electronic variety that floats around in cyberspace instead of bouncing about in purses and pockets. Surveys show that we are totally behind the times in our attachment to the ¥10,000 and ¥1,000 notes and the way we keep carrying ¥100 and ¥10 coins around with us, not to mention the feather light and totally cumbersome ¥1 bit.
South Korea is said to be a 98% notes- and coins-free nation. The figure is 60% in China and 55% in the UK. But the equivalent ratio for Japan is a meagre 18%.
The Swedes are experimenting with the e-krona and are thinking about doing away with physical kronas altogether. At least their central bank seems to be considering such a course of action. Danish parents send their children their pocket money electronically. But in Japan pocket money is for the most part still transferred physically from the parental purse to the pockets of their offspring.
E-commerce does of course take place very widely in Japan. People use pre-paid cash cards to get on trains and buses. Even Japanese people can become addicted to credit card-based spending orgies. And yet the fact remains that we are still very much a physical cash-dependent society.
The government and the banking community both seem increasingly concerned about this. They are worried about global competition. To the extent that Japanese people keep conducting their monetary affairs in paper and bits of metal, Japan can never hope to compete effectively in the global financial marketplace. We can never become properly linked up to the global financial transaction network so long as people keep drawing cash out of automatic teller machines and stocking their wallets with paper money. Or so they say.
They are right of course, up to a point. But there are other aspects to the use of physical cash that have to be weighed against all the talk about going global financially. For one thing, dealing with physical money keeps your brain in good shape. You are constantly calculating.
You are always thinking about how to get rid of all the ¥10, ¥5 and ¥1 yen coins which keep accumulating about your person. When you are about to go on holiday you think carefully about how much money you should take out of the bank. You worry about what denomination of notes you should carry in what proportion. You don’t want to be faced with a situation where you have only ¥10,000 notes to pay for your ice creams and single glasses of wine. When you are about to go out for a meal with friends and you know that the bill is to be split equally among you, you are careful to go prepared with plenty of small-denomination notes and a good variety of coins, so that you can always produce the exact amount required.
None of the above would apply if you were doing everything with electronic cash. No brain-work is required in the act of paying for things with the QR codes on your smartphone. Mental degeneration awaits.
On a more sinister note, the abolition of physical cash will mean that you will be deprived of the means of hiding your money from Big Brother. Or of protecting your money from the potential collapse of the bank with which you do business. Physical cash can always be taken out of the bank and hidden under your pillow, or somewhere much more secret.
But you cannot hide electronic money under the pillow. You cannot hide it under anything. Imagine a world in which the central bank of a nation issues electronic money directly to individuals. In that situation it will be virtually impossible to escape surveillance of how you are moving your money about. That is fine if you can trust your central banker.
But what if the central bank becomes the mere monetary branch of a dictatorship. The only thing to do in that eventuality is to go underground and reinvent a revolutionary citizens’ system of physical cash transactions.
It could well be that the Japanese have already embarked on this journey into an underground world of citizens’ cash. With interest rates virtually non-existent, it actually makes no sense at all to keep your money in the bank. Far better to hide your money where nobody can get at it.
Come the day when the Bank of Japan announces the switch to an e-yen regime, we will be well prepared and well stocked to go underground with our notes and coins. There we will spend our days constantly adding and subtracting and dividing and generally keeping our calculating brains in very good shape. Far better than bashing our smartphones on electronic code readers in brainless bliss.