ultimately a shared responsibility between the provider and the consumer. even the most robust systems can be breached if consumers do not exercise adequate caution or are deceived by fraudsters. in this regard, consumer education plays an important role in keeping cashless payments secure. in addition, cash is also a choice payment instrument for illicit activities. unlike digital transactions which almost always leave a trail to the parties, payments in cash are anonymous. in his recent book, the curse of cash, kenneth rogoff points out a very sobering reality – the amount of us dollars in circulation outside of banks suggests that each american should have around usd4, 200 in their wallet. this is not the case. according to him, most of this money is used to hide transactions. however, this alone does not warrant moving away from cash entirely. rogoff himself acknowledges this, and proposes the solution of eliminating large denomination notes – such as the united states ’ hundred dollar bill. the logic is simple. with the next largest bill being usd50, such a move would immediately make it twice as cumbersome to hoard and pass around suitcases of cash. this is in fact a policy call which malaysia has made, when we phased out the rm1000 and rm500 notes in 1999. at the same time, the case for removing large denominations becomes weaker as each year goes by. this is because the effect of inflation plays a similar role in making cash transactions more difficult for illegal activities. social cost the second element for consideration is the social cost imposed by the form of currency chosen. on the surface, cash may appear to be costless. consumers do not have to worry about subscription fees and exorbitant interest rates lying in wait. retailers are not required to pay fees to accept cash, and so need not pass on any servicing charges to the consumer. there is no need for banks and merchants to invest in and maintain sophisticated software and hardware to support digital payments. however, cash does not come cheap. money needs to be printed and minted, and then 2 / 4 bis central bankers'speeches transported, counted and guarded – several times over. each step here poses a significant cost to various actors within the economy. central banks have to deal with the rising cost of producing secure and durable money. storing and moving money around under tight security can be expensive for both commercial banks and retail businesses. this does not yet account for the losses relating to under - reported taxes which is directly enabled by a cash

winners from globalisation speech given by ben broadbent, deputy governor monetary policy, bank of england scottish council for development and industry, aberdeen 11 july 2017 i ’ d like to thank will abel, alina barnett, gene kindberg - hanlon and jeremy martin along with other colleagues for their helpful comments and assistance. all speeches are available online at www. bankofengland. co. uk / speeches two hundred and fifty years ago, a few miles south of here, adam smith began working on the wealth of nations. it was published a decade later, in 1776. so there were ( at least ) two revolutions that year, one marking the birth of a country, the other the birth of modern economics. one of smith ’ s main targets was the doctrine of mercantilism – the idea that international trade is a zero sum game, one you win by exporting more than your neighbour. he pointed out that, if it allows you to concentrate on things you do relatively well, and buy more cheaply the stuff that others do well, international trade can make both parties better off. a precise definition of “ relatively well ”, in this context, had to wait until david ricardo ’ s principles of political economy, published in 1817. what matters for trading patterns, he explained, was not just absolute advantage – whether a domestic sector was more productive than its peers in other countries – but also its productivity relative to other sectors at home ( “ comparative advantage ” ). this was important, because it meant that, in principle, a country could have lower productivity across the board, in the production of every good, and still end up as a net exporter of some of them. but the basic points survive : there ’ s no reason to suppose that commerce across an international border is any less mutually beneficial than that within a single country ; nor is there any reason to view imports as intrinsically bad. of course, you might feel differently if you happen to be in one of the sectors at a comparative disadvantage. in the mid - 1970s, just as the post - war boom in global trade was getting started, the uk ’ s clothing and textile industry employed over 800, 000 people. that ’ s one in every 30 jobs. as markets opened up international prices fell steeply and, over the following thirty years or so, the domestic industry all but collapsed. output fell 65 %, employment by 90 %. it now accounts for one in every 370 jobs. not all of this