Who stands to benefit as digital currencies pick up steam?

There has been much talk about the introduction of a digital currency and, this month, the Hong Kong Monetary Authority launched a trial run (“Hong Kong launches e-HKD pilot programme, with 16 companies to test digital currency for public use in shops, restaurants”, May 18).

However, many people, including myself, find all this quite incomprehensible.

I was told many years ago that a vast amount of money in the banking system is digital, and that banks hold only a relatively small amount of cash. I get my salary paid into a bank account, and it all disappears via transactions involving standing instruction and credit card payments.

Are these transactions not digital? They are certainly not cash. For me to switch from a system that offers digital and/or cash to one that is digital only, I would need to be offered a much higher interest rate on deposits.

However, I can see advantages for the banks. They can cut staff costs considerably. If money is not held as cash, banks can impose negative interest rates.

For the same reason, bank runs – where queues of people fearing a bank failure line up outside the bank to get their money out as cash – would not occur.

The major advantages of digital-only money for governments is that all transactions will be recorded, possibly resulting in higher tax revenue and better control of criminal activities.

I hope some expert will explain in your columns whether it makes sense for the general public to switch from the current digital and/or cash system to one that is digital only.

P.K. Lee, Tung Chung