Physical Cash Economy Propping Up Drugs and Prostitution, say Future of Money Experts

Prostitutes wait for customers in Rome (Reuters)

Physical cash only exists in a society increasingly using digital payments because of laziness and criminal activity, say experts on the future of money.

Speaking at the Financial Times's Camp Alphaville event, a panel of experts said empirical statistics show that the majority of cash in circulation in places like the UK goes towards funding prostitution, drugs, and tax evasion.

"According to the only type of statistics that matter when taking about where, empirically, cash goes to... most of the cash in circulation is only used for criminal activity," said David Birch, director at Consult Hyperion, an electronic transactions expert.

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"One could argue that central banks and politicians help drugs and prostitution to make money for the economy. Why do we need €500 notes? It's clear they'd only be used for questionable purposes.

"Furthermore, the disconnect between data and what politicians do is interesting. The Office for National Statistics (ONS) shows that drugs and prostitution makes more for the economy than agriculture, yet Brussels gives farmers more subsidies."

Meanwhile, the founder of digital financial services firm Anthemis Group, who arrived late at the event because he "refused to go into a taxi that didn't accept cards", agreed with Birch and said it's easier to evade the authorities by using cash.

"One of the consistent forms of using cash is by tax evasion by hiding money from the taxman with cash in hand, from your taxi driver to your criminal gangs," he said.

At the end of May 2014, ONS data showed that prostitution and illegal drugs account for a greater contribution to the British economy than housebuilding and agriculture.

The government calculates, at current prices, prostitution and illegal drugs added £10bn ($12.3bn, €16.7bn) onto gross domestic product (GDP) in 2009. The government data adds that £5.3bn was attributed to prostitution and at least £4.4bn to the illegal drugs trade.

In comparison, agriculture contributes less than £9bn to the UK economy per year.

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