Smart Banknotes: A Proposal for Bank Notes that Bridge the Gap Between Physical and Electronic Money

The Futurist, Vol. 5, No. 1, January-February 2011

5 Pages Posted: 5 Oct 2010 Last revised: 10 Aug 2014

Ignacio Mas

Tufts University

Date Written: July 4, 2010

Abstract

Cash imposes large costs on society, yet it is hard to envision moving to an entirely cashless society. If we cannot get rid of cash, then we need to change it in a way that makes it less costly for all to handle. We consider the possibility of creating a new kind of banknote that can be activated or deactivated electronically by transferring value between a banknote and your bank account, right from your mobile handset. Cash could be transported cheaply in its deactivated form using normal retail distribution channels; stores could make their accumulated cash balances vanish at will by simply deactivating it; and bank customers would be able to convert their bank account into cash or vice versa anywhere, anytime. Mobile banking could flourish in developing countries without requiring the development of complex, costly cash agent networks. In this fashion, the mobile handset can truly integrate the capabilities of an internet banking terminal and an ATM.

Keywords: electronic money, digital money, branchless banking, mobile banking

Suggested Citation

Mas, Ignacio, Smart Banknotes: A Proposal for Bank Notes that Bridge the Gap Between Physical and Electronic Money (July 4, 2010). The Futurist, Vol. 5, No. 1, January-February 2011. Available at SSRN: https://ssrn.com/abstract=1687368

Ignacio Mas (Contact Author)

Tufts University ( email )

Medford, MA 02155
United States

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