LISTEN NOW: Smart Banknotes and the Future of Money


Author: Sarah Corley

Must we pit digital money against hard cash? Must we swear our loyalty to one or the other? What if a banknote could function as a digital prepaid card, which allows you to add money using your mobile phone? And what if it could also be accepted at the corner shop in the same way banknotes are passed around today?

In an exclusive webinar in March 2019, Ignacio Mas, Co-Founder and Executive Director of Digital Frontiers Institute (DFI), explored how smart banknotes may be the future of money. He opened by outlining the interoperability issue that exists between cash and digital money, and which forces people to make a choice between the two.

There is a 1mm gap between digital money and cash – we can lay our bank notes on the mobile phone where we have our digital money, but currently to convert one to the other we have to go to an agent or bank. This means leaving our house and travelling for some a significant number of kilometres. It is inconvenient, clunky and creates delays for the customer as well as significant costs to financial services providers by maintaining agent networks or physical infrastructure.

The current situation doesn’t meet customer needs, we should have options that allow people to choose physical or digital at their convenience or appropriate for use. Forcing choice also

Ignacio’s idea is to give people full freedom to use physical or digital cash through the creation of smart bank notes. Ignacio suggests the notes should have the following features:

  1. Chip to check validity
  2. Ability to check note status via a mobile device
  3. Ability to change outward appearance of note to indicate status

The potential of this technology is incredible, and could significantly change how economic actors exchange value. The webinar was based on an article that Mas wrote for Quartz’s The Future of Money: Smart Banknotes will be the cash of the future.