A gold-plated reform of the monetary system can offer consumers genuine choice

by | Mar 31, 2022

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By Cameron Parry, Founder and CEO of Tally

Inflation has spiralled out of control, reaching a 30-year high amidst warnings that much worse is to come. The Bank of England has predicted that it will hit 8% by June as the price of energy, food and transport rockets.

Inflation is of course a huge problem for everyone, reducing the value (the purchasing power) of money. Even though cash held in savings accounts has stagnated in recent years due to historically low interest rates, with inflation running high, people’s savings are losing value in real terms at a much faster pace.

Earlier this year, it was also revealed that government net debt now sits at over £2.3 trillion, with the borrowing to GDP ratio at 95% – the highest it’s been since the end of World War Two. Despite this, the Chancellor, understandably, is facing growing calls to help out with the severe cost of living crisis.

Sadly, it seems this level of inflation will go on and on. The Bank of England, like central banks globally, looks likely to keep printing fiat (government issued) money, which will further devalue it. Of course, fiat currency is almost entirely digitally created. With less than 4% of pounds sterling ever printed as banknotes, over 96% of the money in circulation is little more than a stroke on a keyboard.

All bank customers, whether savers or those using everyday accounts, are being let down by the incumbent banking system. When you consider the full picture, it’s become painfully clear that fiat currencies are simply no longer fit for purpose. People need new solutions designed to address the fiat currency monetary trap. They need an accountable money supply linked to an inflation fighting asset, that works seamlessly with the accounts, cards and ATMs we’re used to using on a daily basis. Most importantly, they need to protect themselves from collapsing fiat currency value.

Our own research has highlighted that over a third (38%) of UK adults would now use an alternative currency to protect their savings, if the safety of their money is guaranteed. This figure jumps to 53% of 18-24 year-olds, with Gen Z acutely aware of the raw deal it receives from the traditional banking system.

One alternative to fiat money is cryptocurrency, which continues to grow in mainstream awareness. Last year, it was estimated there were over 300 million crypto holders worldwide, with close to 10 million in the UK.

In line with this, many countries are exploring the feasibility of introducing a Central Bank Digital Currency (CBDC). According to Gartner, 83 countries are experimenting with this virtual form of fiat currency, with China having distributed more than $5 billion of its “digital yuan” to people since June 2021.

Cryptocurrency, however, remains a spectacularly volatile investment and therefore not suitable as an everyday money. In just one day in 2021, for example, Bitcoin’s value dropped by 30%.

A more viable, and secure, option for people looking to beat inflation is gold. Over the past year, gold prices have increased by 14%. Looking back further, over the last 20 years the value of the pound has fallen 89% against gold. Historically, gold is proven to grow in value against every fiat currency over time.

But gold on its own is not enough; gold itself is not money. At Tally, we’ve leveraged the strength of gold to offer consumers a genuine alternative currency they can trust – a monetary system and payments platform that uses gold to protect Tally customers’ money.

Unlike traditional banks, Tally operates in a full reserve monetary environment meaning  deposits aren’t used to expand the money supply through writing new loans. In this way, Tally is helping customers to fight inflation.

The Tally Everyday Account unlocks access to gold ownership and protects against out of control inflation. Through Tally, customers can use gold as everyday money and, crucially, it belongs solely to them – their funds are never put at risk by being  loaned out, leveraged up or invested. Steering clear of these toxic banking practices, we’ve also been able to launch a new savings product with a 2% fixed-rate return on the fiat value of customer deposits between £1,000 and £20,000 – a market-leading offer for savers.

In light of the relentless inflation that’s set to worsen, it’s time for consumers and savers to make the change to an alternative everyday money that has their best interest at heart.

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