National currencies are a UX disaster

I’ve been wondering why is it a good idea to use a different nomination of money in Australia, in Canada, in the US and in the UK? The main rationale I can see is macroeconomic. The national government can control the economy through devaluing its currency. But from a UX perspective – they are a disaster.

Back in the days the kings and queens of European countries invented their own currencies. Later the nation states adopted these to have some control over their economy.

Now that the world is more connected than the kings and queens then expected – these currencies have created an industry, which benefits from this multitude of currencies. That industry softly, but surely leeches $200bn out of the world economy every year. The technical term for it is “foreign exchange” (FX). Annoying as it is, but the global economy doesn’t work without it.

National currencies are a cost, a drag and an inconvenience. While the interest rates matter over long term, in any moment in time money == money == money, whichever government has issued it. In theory one shouldn’t really care, which nomination of money they are carrying in their pocket. If you also believe that currency markets are “efficient” and the future exchange rates are unpredictable for common men then it shouldn’t also matter in which currency we hold our savings. There is no market-beating strategy, so any currency we hold is as good as any other from future value perspective. This doesn’t work in practice, your costs are in one currency – and your savings in that one currency have much less volatility than any other currency.

Estonia got it only half right in ’91 when disconnecting from the Soviet rouble. We adopted Deutchmark, but named it our own Estonian Kroon, which was pegged to DEM. Our backend was running on DEM and later on EUR, but the frontend was still EEK. The UX was properly fixed in ’11 when we joined the Euro. Haven’t heard anyone miss the broken experience for the last 6 years. It has been great to watch Latvia and Lithuania join later. We could even count the money directly saved by this move.

Don’t make me think

The $200bn cost of the FX industry is embarrassing, but the more I spend time with folks exposed to the problem, a suspicion grows on me that it is just the tip of the iceberg.

How many cross-border business deals have not happened, just because it is a bit inconvenient. Because we don’t want to spend time implementing a multi-currency widget in our WordPress webshop, because collecting invoices in a foreign country is just more work. Maybe that money will be worth less when I finally receive it. Oh, and then also need the multi-currency module in out accounting software and hire more expensive accountants.

I’ve often noticed that when foreign currency comes up, then most people get a visible stress reaction. It means uncertainty, it means they need to think, it means complexity for the brain, in means inconvenience. It is best to avoid.


“BTC,” they whispered with excitement. Maybe, but it remains unlikely that the world wants to adopt yet another currency while we have enough stress from the existing ones.

Maybe governments will solve it by collaborating. A few other Eastern European countries will join Euro, but given the unsolved macro-socio-economic troubles in the currency union, it remains unlikely that the inconvenience of UX gets high enough on the agenda.

I don’t know what the proper fix is going to be, but we have a chance to improve the UX today. I’m now pretty sure that the $200bn cost issue will be solved, or at least the cost will be less than 10% of that in 7-10 years. In the same timescales we should be able to get to instant cross-border tranfers.

Money without borders – instant, convenient and eventually free.
– the TransferWise mission

Once our money can instantly move cross borders and switch nomination reliably with negligible exchange cost – then I hope we have to think less. Thinking less is progress, because this relic concept of currencies is a waste of brain in the grand scheme of things.

Working on it.