Law and the Future of Money: Will Technology Eliminate Banking?
Very few things beat the feeling of having more than enough money in your bank account or the excitement the sound of a credit alert brings. However, these feelings are not sponsored by the currency itself or the figures, but by the value it has and the quantity of things it can be exchanged for. It is in light of this that it becomes necessary to discuss what money truly means. Money, like humanity, has had its share of evolution. It is safe to say that as humans evolve, so does money. This article therefore intends to examine the evolution of money.
The present state of money was the dream of older generations; it was barely conceivable to the then-human mind that money would be in paper notes with peculiar digital numbers. Definitely not! In the same vein, with the introduction and advancement of technology in different sectors currently available in our modern world, there is no definite way to tell what money could be in the coming years but it is certain that it will not be paper notes as we have them today. In all of these changes, both in the appearance of money and in its value, one thing has remained constant: the presence of the law. Whether or not money was in the form of cowries, as it was in Nigeria in the 14th century, or manilla, coins, or notes, as we have them today, there has always been law – economic or otherwise, stipulating the value or the system by which money is measured, controlled, or distributed. With this in mind, it is safe to assert that wherever money goes, the law goes, or vice versa. Hence, a stratum of this literary work is to help determine or, at best, predict the type of laws that will accompany money in the years to come.
As earlier posited, the evolution of technology is something to reckon with, and a denial of its rapid hold on the future is but a cancerous thought process. Today, we have banks, which act as the intermediary body between an individual and the central bank, offering services to aid the movement of money and the smoothness of financial transactions. It has not always been so. The world has benefited immensely from the creation and operations of banks. However, it has become imperative to ask, “Upon the arrival of the nearest future midwife by technology, what would become of banks?” What would become of the current banking system?
It is pertinent to first define the term “Money”.
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Money is a concept – one that represents the threshold of economic value. Its existence is as old as the idea of trade itself. This concept called money has a history which emanated from the human need to exchange what is owned for what is needed – the same hasn’t changed till date. In the earlier times accompanied by trade by barter, the value of exchange was based on the needs of the parties to the transaction, not necessarily the value of the items exchanged. Hence, a carpenter does a wooden cabinet for a tailor, who in turn does a number of clothes for the carpenter. When the volume and value of work done by both parties are subjected to a measuring factor, like a currency, it may turn out that one of the services rendered is far more valuable than the other; however, for the purpose of that transaction, it was a fair one by the measure of the needs of both parties.
In the modern day, what is now exchanged is a definite sum calculated to be of the same value as what it is exchanged for. For example, a car is needed and money is owned by the proposed buyer. The buyer would have to present a certain sum, say, fifteen million naira to own a Lexus Jeep. The sum of money needed to purchase that car is definite in value. This was one of the major reasons for the introduction of currency – to give certainty to the value being exchanged in order to promote equality of value in trade. To achieve this, it was imperative that value be placed on a symbol to indicate accuracy in exchange. Hence, the currency itself is not money. But, a form of money that presents accuracy in value. Again, money is a concept. It is an idea of trust that allows two or more persons to carry out transactions with the belief that value is exchanged for equal value. The use of currency as explained above is only a barometer for which value can be easily ascertained.
Today, if A wants to transfer Bitcoin to B, all A needs is the Bitcoin wallet address of B. A sends Bitcoin through the Binance app (or any intermediary app offering similar service) to B, and B receives it and confirms receipt of the same to A. Now, this happens to be a complete financial transaction between two persons in the same or even different country without the use of any bank. This innovation has almost completely jettisoned the need of a bank. Banks will only become necessary where B who has successfully received his bitcoin in his wallet needs to exchange his bitcoin for naira. Therefore, banks are then similar to translators, who translate from one language to another; because the service of changing bitcoin to naira is only a necessity because of currency barriers. Hence, if bitcoin were to be a legal tender legalised by the National Assembly, there would be no need to reduce the bitcoin to naira. Whether or not technology will eliminate banking is dependent on the definition of banking. It is very crucial at this point to draw the line between banks and banking. While a bank is a financial institution that offers financial services such as deposit of valuables (such as cash, jewellery, documents), loan transactions, exchange of currencies etc., banking are service offered by but not limited to banks. This means, that all the services offered by banks are banking services, however, not only banks can offer those services.
Although laws have evolved in order to regulate a lot – it only points to the fact that banking has come a long way, and so have banks. Whether technology can eliminate banking is an emphatic no. The reason for this is that, whatever dynamic technology may offer in the future, that will become the new banking system. If the cashless policy were to overtake the semi-cashless policy that is operated today, for example, the use of bitcoin as a legal tender with no hard or physical cash to represent it, the mode of transfer, and the mode of acquiring and securing money is still a form of banking. The old Kings of England or the Roman Emperors would never have thought that there would be something called “transfer”. Imagine the Kings or Emperors collecting tributes via transfer. Hence, so long as money exists, trade continues and payment has to be made or saving has to be done, banking will always exist. Can it totally transform, change or evolve? Yes! Will it evolve on the arrival of a complete technological society? I think in the affirmative. It is bound to change as it has always changed.
CONCLUSION
The beauty of humanity is in its constant ability to evolve, and live in each moment like it is the best until another possibility avails itself. The world has been greatly impacted by technology. The best thing one can do is hastily but carefully follow or risk the pain and regret of being left behind. In every advancement made by technology, only those who quickly see a problem created by the new world would remain relevant. What money may become in a century from now might have been conceived or not, but, the same will need heavy compliance with the law to make it achievable. As posited by Carl Von Savigny the law is the spirit of the people, thus, the law shows how ready the people are to embrace a new way of life. Nigerians have proven to have a high adaptation mechanism, it is perceived that similar traits will be used for such positive and stress-free change offered by technology in coming years.
For banks to remain relevant in the new world ushered by technology, deep foresight would have to be employed to keep them in use, to avoid being overridden by artificial intelligence. Experts in the banking sector would have to acquire sufficient knowledge in order not to be eliminated by technology. Furthermore, lawyers and legislators would need to equip themselves in order to decipher the borderline of all technological issues that may spring up – because issues will definitely spring up.
The marriage between technology and money is inevitable in our current world. All that is needed is to provide the channel through which this marriage would be sustainable. That channel is the law.
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