By Richard Giedroyc
We appear to be under siege.
Several countries are advocating doing away with all forms of physical currency in favor of the latest electronic innovative technology.
Specie currency – coins composed of precious metals and bank notes backed by these same assets – appears to be dead as the world continues to use a fiat money system that isn’t necessarily any improvement.
There are organized militant groups of archaeologists demanding that all antiquities, including coins, be prohibited from being sold commercially.
There are organizations and governments insisting that coins, among other objects in private and museum collections should be returned to the country of their origins because these objects are the cultural patrimony of those nations.
Restrictions are increasingly being placed on the purchase of coins with a relating bullion value in several states.
The U.S. Mint, along with other world coin producers, continues to churn out numerous numismatic products annually that confuse and disappoint beginning collectors while failing to assist the secondary market.
What is the future of coins both as a functional currency and as a collectible? Where are we going? Not all is lost, but “the times, they are a changing.”
Perhaps modern governments are responsible for the move towards a cashless society. In an article by Giles Bransbourg in the first 2015 issue of the journal of the American Numismatic Society on the rise of digital currencies the author says, “…states have proven the worst monetary creators, consistently subverting the rationale behind a stable currency system in order to advance short-term political agendas. As a result the powers to create money have been delegated to anyone needing a new line of credit through the intermediation of the banking system or the debt market.”
According to the May 21 issue of Management Today, “If you believe the techies it won’t be long before we’re all paying for everything with a chip inserted under our skin – or at least with the contactless NFC technology embedded into most high-end smart phones. The death of cash has been predicted for a while now but, while coins and notes are certainly in decline, we’re clearly still attached to them – at least for now.”
The article sites statistics offered by the industry body The Payments Council that indicate 52 percent of consumer payments are now made in cash. Debit cards by volume recently represented 24 percent of consumer payments. How do we interpret the statistic that the number of Automatic Teller Machines recently expanded by 5.2 percent to an all-time high number of machines? Is this contradictory to The Payment Council statistics?
Management Today suggests cash is used disproportionately “for purchases from discount and convenience stores, and charity shops, all of which have exploded in recent years.” The article also indicates cash is the dominant form of payment in “bars and clubs.”
The magazine predicts cash payments will decline by 30 percent throughout the next 10 years, but doesn’t identify a source for this speculation.
On June 5 WaayTV asked the question, “Could the U.S. move toward a cashless society?”
WaayTV cited statistics indicating only 47 percent of Americans use coins and bank notes. A random and unscientific sample of people living in the Tennessee Valley were interviewed with mixed results, however restaurant owner Steve Bunner said, “About 4 percent of my income annually as a business goes to paying service fees for the ability to accept these cards. Who is going to administer this type of program? Would it be administered by our banks?”
The United States isn’t alone. In Great Britain the Jan. 30 International Business Times reported, “Analysis by the Times found that at the current rate, cash payments are falling and cashless payments are rising, the switch will take place on 8 March.”
Payment Council Communications Manager Mark Bowerman added, “We anticipate that this will be the first year that non-cash transactions volume overtake cash transactions. However, we are not expecting cash to disappear anytime soon. It will continue to be a very popular payment method for certain types of people and certain types of situations. We make lots of spontaneous low-value payments by cash at the moment and lots of us will continue to do so.”
The Payments Council is the entity responsible for ensuring payment services work for everyone in Great Britain.
Denmark, Finland, and Sweden lead the European Union in the use of credit card payments per individual. Sweden claims to be the most cashless society on earth. Four out of five purchases made in Sweden are made electronically rather than by using cash.
The Danish government recently announced its plans to make it legal beginning in 2016 for businesses to refuse accepting payments in cash. About a third of Danes use a smartphone application called MobilPay. MobilPay can be used to transfer money between phones or to a merchant. MobilPay is owned by Danske Bank, the largest bank in the country. Danske Bank links their app to NemID, a digital signature link to a national number assigned to each individual.
Finansraadet is a financial institution lobby group in Denmark’s Parliament. According to Finansraadet’s arguments, going cashless would save merchants money through better security and less need to spend time and money handling physical currency.
Belgium, another European Union common currency union member, is considering a change to virtual rather than physical cash. Economist Konstantin Gurdgiev recently said, “It’s a global trend in the sense the central banks around the world, especially in Europe, not just in Denmark, but also in Ireland, for example. Austria [and] Belgium have been trying for a number of years to shift the economies or convert the economies away from using physical cash in transactions and using paper in transactions to electronic payments.”
Even Ecuador is considering going cashless. Since there is little trust in the government or its monetary system it is difficult to determine if an economy void of physical cash would work in such a society. Microsoft founder Bill Gates is a proponent of a cashless society, arguing such a system will encourage banks to provide services to the world’s poorest people due to low marginal costs. Ecuador appears to be a good place to try out this theory.
Not everyone is sold on the idea electronic payments are the eventuality we will face. Sweden’s Royal Institute of Technology Associate Professor of Industrial Dynamics Niklas Arvidsson, a cashless society advocate, admits a 2014 survey in which he was involved points toward two-thirds of Swedes still thinking cash possession is a human right.
In July 2014 Nykredit economist Johan Juul-Jensen predicted Denmark will eventually become a cash-free zone, but added, “I don’t think it’s right around the corner… It’s the direction we are heading – but not in the short run.”
German government economic advisor and economics professor at the University of Würzburg Rolf Bofinger said of physical fiat currency: “…money is ultimately nothing more than points in a score-keeping system for credits and debts maintained by the banking system” in the May 18 issue of the German newspaper Deutsche Welle.
This may be Bofinger’s view, but Germany’s central bank, the Deutsche Bundesbank, reported that during 2014 about 79 percent of individual transactions were still being made in cash.
And while we’re on the subject, is specie really dead? Believe it or not privately issued cybercoins may soon be backed by gold! Anthem Vault is a gold and silver brokerage that is introducing a cybercurrency called Hayek meant to act as specie cybercash. Anthem Vault issued what they call Independence cybercoin backed by gold during 2014.
According to Anthem Vault, more than 700,000 Independence coins have been redeemed.
Then there is Nofiatcoin. According to the Nofiatcoin website, “It is a unique digital currency that facilitates obtaining gold and other digital currencies, investing in agricultural projects, among several other benefits… Nofiatcoin can be exchanged for precious metals, and other digital or fiat currencies at any time.”
Specie cybercurrency isn’t limited to being backed by precious metals. The Urocoin is meant to follow energy and food prices and is backed by a metric ton of urea fertilizer. A gram of pharmaceutical-grade cannabas is the commodity that makes CannabisCoin become specie rather than fiat money.
Don’t write off specie in the United States either. The Texas state legislature approved the Texas Bullion Depository on June 19, a facility where gold can be stored by anyone and would likely be immune from seizure should the federal government ever prohibit private ownership of gold. Plans call for possible Comex membership, the ability to write checks backed by gold, and to make additional types of transactions in gold. In other words, this is hoped to become the provider for forms of specie rather than fiat payment.
Several states are making it difficult, however, for coin dealers and their clients to do business, especially when precious metals are involved. Big brother may go to a particular extreme in Ohio where it is possible coin dealers might be required to take images of the client and the coins they are purchasing, then hold the merchandise for a period of time before being allowed to resell it.
In early May the Prussian Cultural Heritage Foundation announced its ILLICID “research project” that includes a secret file that can store information on just about anything regarding antiquity sales.
Professor Dr. Markus Hilgert is the project coordinator. According to Hilger, “In the light of Resolution 2199 of the U.N. Security Council from Feb.15, 2015, the project has again become increasingly urgent and important. In requesting all member states to take measures against the illicit trade in cultural property from Iraq and Syria, it stresses how important it is to lay the scientific groundwork for such measures in Germany.”
A Nov. 27, 2014 International Association of Dealers in Ancient Art statement rebuffs this, saying: “Exhaustive investigation has revealed that the most important sources of the allegation the trade in ancient objects would finance IS[IS] are not existing.”
Do you want your coin collecting transactions recorded by such a “project?” Remember, all gold and silver was confiscated in the Soviet Union in 1931. Coin collecting is under fire from both the archaeological community and from governments bent on recovering all the cultural patrimony they can grab.
There is currently a Memorandum of Understanding at the U.S. State Department that places import restrictions on coins of ancient Greece, early Republican Rome, and Roman Provincial coins from the early Imperial period being imported from certain European countries. A Feb. 26 Italian request to renew an MOU would expand restrictions on some collector coin imports.
The Cultural Property Advisory Committee can recommend to the State Department if import restrictions are appropriate and if restrictions should be placed on specific cultural goods. The mission of CPAC is to provide the State Department with useful advice. CPAC has in the past recommended against restricting the import of coins. Beginning in 2007 restrictions were placed on the import of coins defined as being ancient originating from Bulgaria, China, Cyprus, Greece, and Italy. Some Egyptian coins may follow. No legal definition of the word “ancient” has been offered.
There are activist archaeologists who want to see all future private collecting of artifacts including coins become illegal, while there are organizations including the Ancient Coin Collectors Guild that lobby to protect the rights of private ownership for both collectors and museums within the United States.
Restrictions on archaeological artifacts deemed to be of “cultural significance,” “first discovered within” and “subject to the export control” of a specific UNESCO state party are governed under the Cultural Property Implementation Act.
In early March a Spanish court blocked the auction of a letter written by Christopher Columbus. The court ruled that since the document was of historical significance to Spain it couldn’t be sold. If the Spanish courts are willing to rule a document can’t be sold because of its historical significance to Spain, what about ancient and medieval coins of Spain? What if someone outside the United States wanted to purchase a 1933 $20 double eagle coin?
According to an article published in the March 11 issue of The Guardian newspaper, “While admitting that the EU [European Union] does pave the way for cultural items to circulate freely, the [Spanish] judges asserted that it was within the rights of member states to ban works of cultural importance from leaving the country.
Washington attorney and Ancient Coin Collectors Guild spokesman Peter Tompa said, “I think it probably won’t happen as such on coins unless there is a law that allows the government to stop an auction. The United Kingdom does have a similar law and several years ago an auction was stopped for an Anglo-Saxon gold coin that the U.K. government then bought.”
At least the United Kingdom purchased the coins. The famed Decadrachm Hoard of ancient Athenian coins was seized from an American businessman by the Turkish government during the 1980s. No one was compensated and the coins have never been available for study or to be on public view since.
Will coins someday become an artifact of man that has been relegated to the dust bin of history – another of man’s inventions that became archaic due to modern technology? Can coin collecting flourish in this hostile environment?
How should a coin collector view the challenges of a society trying to go cashless coupled with those who would discourage collecting coins? Andrew Reinhard describes video game money as “the study of the material culture of the immaterial” in an article published in the first 2015 issue of the journal of the American Numismatic Society. Perhaps this attitude should be adopted toward future coin collecting.
This article is not meant to be all doom and gloom, but the article is meant to urge more coin enthusiasts and scholars into becoming involved with these challenges so we avoid seeing coins and coin collecting become something out of the past.