Why do we need digital money?

Written by Charles McManus, Co-Founder and Board Director, ClearBank, and Unicorn Council Co-Chair

Why do we need digital money? After all, we have digital apps - we can make digital payments from our phones globally whether it be when on holiday or paying for goods and services as a business. But as McKinsey has estimated: “Global cash usage now stands at 80 percent of 2019 levels and continues to decrease at 4 percent a year. The $26 trillion in payments still made in cash represents a massive opportunity for digitisation.” Currently, our payment infrastructure is electrified, not truly digitised - hence, regulators are offering ‘e-money’ (not ‘d-money’) licenses. When we talk about digital payments today, we are often referring to electronic transfers that still depend heavily on traditional banking systems, processes and rails. These methods, such as cheques, debit cards and wire transfers, rely on cash being deposited into a commercial bank which means that the depositor (you and me) essentially becomes a creditor to the bank, trusting it not to fail. Certainly, the emergence …