Transitioning to a fully cashless monetary system might be convenient, but are we ready?
Matt Shipley (he/him) // Communities Editor
Since Russia’s invasion of Ukraine began on Feb 24, 2022, economic sanctions from the West have piled in en masse. Notably, Russia and its citizens are cut off from the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system, as well as Apple Pay, Google Pay and multiple international streaming services. The rapidity of this systemic cutoff, while far removed from the West, still has wide-reaching implications for the rest of the world.
A New Big Red Button
We’ve all heard of the “big red nuclear button” — the choice to end all choices. It’s a danger everyone’s aware of — countless films, books and poems have been written on the subject. The nuclear decision, while still very real, has been spun into a star-studded Los Angeles fanfare so many times that it seems unobtrusive and far-removed from the worries of the West. However, there remains a more roguish button — a blue button, if you will. It’s a button that’s been bashed to pieces as more and more corporations deny service to Russia, but it could just as easily be turned on any of us.
As the banking restrictions rolled into Russia, civilians mobbed ATMs across the country. Billionaires and oligarchs scrambled to offshore their wealth and move their physical assets beyond Russian borders, and Russian companies found themselves unable to export goods or collect wealth from the rest of the world. Innocent Russian citizens are finding themselves in a now-archaic age: where physical cash is their only stable form of currency, and everything within the bounds of their nation is on an economic rollercoaster. Nobody knows what Western service may be denied next — oil, food imports or even widespread Internet access. To anyone who takes those privileges for granted, losing them would be a huge blow, no matter where they live in the world.
Why It Should Matter To Us
We, as a global society, are in the midst of a technological revolution. For decades now, a popular philosophical angle has been to wonder whether or not we are ready for said revolution, and nevertheless the silicon train plows onward. Within this revolution is the move towards a fully cashless system — one where all payments are made either by card, by app or online. It’s certainly a solution that makes life much easier for consumers, but given how quickly the West has essentially turned off Russia’s cashless system, it begs the question: is this system really as secure as it seems, and who has the power to turn it on and off?
David Kuch is an instructor at CapU’s School of Business. “With new technologies in this space quickly advancing, specifically digital payment systems, there are some downsides that come with the emergence of new cashless payment methods,” said Kuch. “Firstly, the main concern is that with anything digital there is always a possibility of a data breach and with systems getting hacked. How a company handles and communicates the breach for their customers and the security protocols put in place to prevent further data breaches will be key.”
Kuch goes on to state that while much of the system’s fragility is on the macro level, cashless payments can also affect the individual. “!t is a lot easier to spend “digital” money vs having “cash in hand” which can make it quite challenging to manage finances and it can be a slippery slope downwards for many people that are not good at managing their finances,”
Why We Shouldn’t Be Worried
The reasoning behind Russia’s bank shutdown isn’t hard to find. Declaring war and invading another country is a serious affront to international order, and in all cases, modern imperialism should be faced with significant consequences. In many instances, though, this hasn’t been the case at all. The ongoing conflict in West Asia (the Middle East) proves that there is a certain hierarchy among the countries of the world.
The West, as stewards of the majority of the world’s economic and military strength, are in turn granted a sort of de facto immunity against the sorts of sanctions it has imposed on Russia. As has been proven countless times by Western nations, most notably the U.S., supporting a conflict (even both sides of said conflict) in a non-Western nation is not a punishable offense. Sure, it comes with its fair share of global criticism, but if all nations were treated equally under international law, economic sanctions would fall left and right onto Western imperialist nations.
So, for the time being at least, we don’t have to be worried about our banking system’s imminent collapse. Barring a quick evolution to a Canadian surveillance dystopia, we most likely won’t have to flock to ATMs and give up mobile payment. If this conflict drags on long enough to embroil the rest of the world, though, it may be a smart move to keep some emergency cash on hand, just in case.