Since the time of the early civilizations, money became an integral part of society as people use it to attain basic needs and specialized services, including luxury. As the years progressed, the image of money had changed from circular stones to paper money and metal coins and its value varies from its country of origin (currencies) and the resource or service required. In recent years, money has taken another makeover as payable services and goods are now available online for people on the go, creating “electronic money”. With the introduction of electronic money, there are a few sectors now pushing for the abolishment of paper money since many now opt to use online and digital services. However, others are arguing against abolishing paper money given the sentimentality of such system and the vulnerabilities of electronic money. In today’s economy, electronic money is a useful monetary system as society becomes more advanced and digitalized, however, paper money should not be eliminated and must be retained because of its irreplaceable value and can be an alternative if electronic money does not work.
The value of money in today’s economy shows itself in the functions it can sustain: may it be for a capitalist type economy or a socialist type economy. According to Dwivedi (2005), money enables societies to eliminate the problem of the barter system such as the identification of value and the capacity of money to be the medium for exchange. Modern markets nowadays now utilize money’s organized pricing system that would give prices to each item based on value. Money also plays a key role in improving production since money is required to purchase resources to create new goods and services. In addition to this, money would allow production to accelerate to continue work without further delay. Money is also considered the blood of the modern economy because without it, production, employment, and markets would not progress without financial backing and would ultimately crumble the entire economy. Finally, money opens opportunities for the public when it comes to selecting goods and services. Without money, it is likely that consumers would be limited to what they can offer in exchange for the commodities they would like .
Since money in the modern economy is becoming more advanced and converted into an electronic format, it is visible that electronic money is advantageous and should be used. Several advantages can be seen with the use of electronic money, which traditional paper money cannot provide easily without a doubt. Mukherjee (2002) stated that electronic money can remove the necessity of having cheques, credit cards and currency that can be faked and remove further burden for consumers, especially in validating their transactions. According to Schneider (2008), electronic cash systems and electronic cash is more efficient as compared to paper money because consumers can transfer electronic money through the internet or through their credit cards without needing paper money. Electronic money is also cheaper to use because the service cost of using electronic money or currency as compared to traditional paper money is pinned to one common price no matter where the customer or business is located around the globe. Electronic money is also a great monetary system because it can open more businesses and reach more markets.
However, while electronic money is more efficient than paper money in today’s economy, paper money should not be faced out or removed from the system because it still is an irreplaceable monetary system that cannot be changed by electronic money. According to Schneider (2008) and Mukherjee (2002), electronic money is a vulnerable payment system because it can easily be tampered or faked like other electronic services. First and foremost, electronic money transactions do not provide a clear auditing trail that would normally allow users to trace if the money they use is used for the legal purposes, making money laundering plausible. Electronic cash can also be stolen by hackers from copying a consumer’s details and even forge electronic cash. In this extent, consumers are more likely to lose more money than sustaining traditional paper money. . Aside from electronic money’s vulnerabilities, paper money’s popularity and worth had already been tried and tested throughout history, which makes it safer and efficient for everyday users who could not easily access electronic money mediums. Paper money also costs less and can be produced easily because there is no clear loss on metallic supplies and its rate is also similar to electronic money. Paper money is also easily transferable because it can be carried everywhere and would not be vulnerable to offline systems in times of emergency. Finally, paper money contains historic value that enables citizens, both young and old, to remember a part of their history through looking at their currencies, something that cannot be done with electronic money .
It is undeniable that without money, societies around the world would not be able to progress in its rapid state today. With development and progress comes improvement even in the banking industry since many now need to have their services done online or cashless. As money continues to become available in electronic format to sustain the growing demand, however, it is highly unlikely that paper money would drop in production or value in the next 5 years. With the visible deficiencies and setbacks electronic money still has (ex. electronic money theft or forgery), paper money will be retained because of its capacity to serve as the alternative currency if electronic money does not work and its undaunted service to people throughout history. Paper money is also valuable because it holds a part of history that cannot be replaced. It is important that people continue to see money, may it be paper or electronic, as an integral part of society that should not be used for illegal purposes.
Dwivedi, D. N. (2005). Macroeconomics: Theory and Policy. New Delhi: Tata McGraw-Hill Education.
Mukherjee, S. (2002). Modern Economic Theory. New Delhi: New Age International Publishers.
Schneider, G. (2008). Electronic Commerce. Boston: Course Technology.