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The Social Role of Money in an Age of Digitalisation

Categories : Cash connects people, Cash has legal tender status, Cash is a public good, Cash is a social network, Cash is the first step of financial inclusion, Cash protects privacy and anonymity
December 6, 2022
The digitalisation of money negatively impacts social cohesion and financial inclusion. With digitalisation, the monetary system becomes more a private good than a public one – and one that risks leaving the most vulnerable behind.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

The Axa Research Fund has published an in-depth analysis of societal resilience. The publication highlights that three decades of economic growth and technological innovation have contributed to reducing extreme poverty and increasing literacy. This has, however, been achieved to the detriment of the environment and has come with growing social and economic inequality. Academic and institutional experts offer a holistic view of the most salient topics in the fields of inclusion and societal resilience, including gender inequality, climate change, health systems… One paper focuses on the social role of money in an age of digitalization.

Tristan Dissaux, economist and researcher in socioeconomics and financial innovations [and member of the CashEssentials’ Steering Committee], explains how the digitalisation of money comes with a high social cost despite undeniable gains in terms of convenience and efficiency.

“Monetary systems are not just technical in nature, but vital tools of social cohesion, creating a “community of payment”. They embody shared values, legitimacy, and societal trust. Their functionality is vital for societal resilience.”

Dissaux argues that as the digitalisation of money accelerates, it becomes urgent to act now to address these drawbacks and preserve the social role of money.

“It needs to be recognized that digitization has grown because it makes sense in cost and efficiency terms for the private financial sector to move away from cash.” says Dissaux.  This, however, has led to the erosion of the cash infrastructure itself, which has nudged individuals away from cash. “Therefore, to preserve cash for those who need it, cash needs to be recognized as a public good akin to a public utility. This requires the commitment of the state.” concludes Dissaux.

This post is also available in: Spanish