Visualizing The Global War On Cash
By Tyler Durden
There is a global push by lawmakers to eliminate the use of physical cash around the world. This movement is often referred to as “The War on Cash”, and there are three major players involved:
1. The Initiators
Who? Governments, central banks.
Why? The elimination of cash will make it easier to track all types of transactions – including those made by criminals.
2. The Enemy
Who? Criminals, terrorists
Why? Large denominations of bank notes make illegal transactions easier to perform, and increase anonymity.
3. The Crossfire
Who? Citizens
Why? The coercive elimination of physical cash will have potential repercussions on the economy and social liberties.
Is Cash Still King?
Cash has always been king – but starting in the late 1990s, the convenience of new technologies have helped make non-cash transactions to become more viable:
- Online banking
- Smartphones
- Payment technologies
- Encryption
By 2015, there were 426 billion cashless transactions worldwide – a 50% increase from five years before.
And today, there are multiple ways to pay digitally, including:
- Online banking (Visa, Mastercard, Interac)
- Smartphones (Apple Pay)
- Intermediaries ( Paypal , Square)
- Cryptocurrencies (Bitcoin)
The First Shots Fired
The success of these new technologies have prompted lawmakers to posit that all transactions should now be digital.
Here is their case for a cashless society:
Removing high denominations of bills from circulation makes it harder for terrorists, drug dealers, money launderers, and tax evaders.
- $1 million in $100 bills weighs only one kilogram (2.2 lbs).
- Criminals move $2 trillion per year around the world each year.
- The U.S. $100 bill is the most popular note in the world, with 10 billion of them in circulation.
This also gives regulators more control over the economy.
- More traceable money means higher tax revenues.
- It means there is a third-party for all transactions.
- Central banks can dictate interest rates that encourage (or discourage) spending to try to manage inflation. This includes ZIRP or NIRP policies.
Cashless transactions are faster and more efficient.
- Banks would incur less costs by not having to handle cash.
- It also makes compliance and reporting easier.
- The “burden” of cash can be up to 1.5% of GDP, according to some experts.
But for this to be possible, they say that cash – especially large denomination bills – must be eliminated. After all, cash is still used for about 85% of all transactions worldwide.
A Declaration of War
Governments and central banks have moved swiftly in dozens of countries to start eliminating cash.
Some key examples of this? Australia, Singapore, Venezuela, the U.S., and the European Central Bank have all eliminated (or have proposed to eliminate) high denomination notes. Other countries like France, Sweden and Greece have targeted adding restrictions on the size of cash transactions, reducing the amount of ATMs in the countryside, or limiting the amount of cash that can be held outside of the banking system. Finally, some countries have taken things a full step further – South Korea aims to eliminate paper currency in its entirety by 2020.
But right now, the “War on Cash” can’t be mentioned without invoking images of day-long lineups in India. In November 2016, Indian Prime Minister Narendra Modi demonetized 500 …read more
Source: Visualizing The Global War On Cash
