With negative interest rates becoming more prevalent and the IMF calling for the abolishment of cash to allow levying negative interest rates on all balances, I think it's perfectly valid to want a right to pay in cash.
On the other hand, negative interest rates have been prevalent for all of fiat history, thanks to monetary base and commercial bank money inflation. Negative nominal rates only make it more explicit.
"Negative nominal rates only make it more explicit."
Not really. Inflation happens when there is a real resources constrain. You are demanding more from the economy that the economy can produce. If you have doubts about this, just look into the result of the QE programs that have generated not inflation.
Negative rates don't need this condition and don't make really sense. First they push money in the system and then they pull money from the system, but everything continues the same.
In fact, negative interest rates can be seen as a way of avoiding doing the logical thing: fiscal policy and direct investment.
Financial criminals, you mean like the banks. Yes I would like something done about the laundering activity for criminal organizations by banks. How much money do you think your average criminal would move via cash? How much money do you think banks have moved to facilitate economic crimes. In total?
If you look at the HN front page there's an article on the Clinton "system". They get bribed - sorry - I mean rewarded with million of dollars just fine without any privacy or cash involved.
IMO simpler is better. A legal guarantee for anonymity that might end up being backed by complex technology is worse than a legal guarantee that you can pay with paper money regardless of anonymity. That's because paper is less likely to have an unnoticed back door (what anonymity does Bitcoin provide if your PC is running a keylogger?)
In fact this makes me think of all the nice things we could have if support for simple mechanisms was legally required in various areas of life.
You are right, and that is why for instance online voting does not get serious attention. It is far easier to implement all requirements with pen and paper. First one that your vote should be known only to you. I would not trust any computer based voting software. I can easily imagine next day some sad people could come over to my place and question me why I voted for wrong person.
But those things are not controllable. I don't just want to know who you are giving money to, I want to be able to stop you from giving money to anyone at any time for any justifiable flimsy explanation. Think about what PayPal is doing to VPN vendors right now. Their excuse is that VPN vendors are enabling copyright infringement. Not too far from the government claiming this tomorrow, literally. Do you want this?
Exactly. The truth is, paying electronically is so much easier than with cash. Either way, paying with cash is the past and will (slowly) move away. I'd much rather be an anonymous technologist than an anonymous luddite.
> I'd much rather be an anonymous technologist than an anonymous luddite.
Luddite? Do you even know what this word means? There is currently no anonymous payment technology on this planet that works universally and everywhere.
In face of this reality, cash has its value for everyone that wants to pay anonymously.
I think legislature should focus on the core of a problem and create laws that solve that problem. The core of the problem is anonymous payment, not 'cash is the best payment system'.
I think that laws should focus on increasing privacy of (electronic) payment information, not force cash to be kept around.
In the Netherlands more than the US, cash is being phased out more and more. I would rather pay with a debit card with increased privacy than force businesses to keep cash registers.
Laws requiring an "increase of privacy of payment information" fall under the same problem of Playing chicken with cat.jpg[1]. In essence, they help, but human honesty and compliance with the rules is still a very weak replacement for a solution where the information is not accessible at all.
There are some academic proposals and proofs-of-concept implementing anonymous electronic payments, but while they may prove worthy successors of cash, they are certainly not ready.
that's it. I couldn't give two hoots about anonymity vs being able to contactless payment (although having to get my wallet out and hold it against the reader is definitely still too much effort...)
Some people prefer cash for a variety of reasons, self control, budgeting etc. Sometimes for various tax reasons. But I just don't see the evidence of the general public caring about privacy on this one.
I'm conflicted. Bags of cash are also the preferred way to conduct shady business. I think some cash flow limit from each account would work better than a classic either/or solution.
I know, but coming from a country where corruption, concussion and other related things are extremely prevalent in the day to day life a little more control wouldn't be bad. There should be a middle ground between anarchy and totalitarianism, it's not like I'm advocating strict control for everyone.
There are other, simpler way of fighting "shady business". The main one being legalization of activities that are currently illegal, but don't bring much social harm (prostitution, drugs). You can also fight corruption by periodically comparing a person's assets to the amount of taxes they paid (personally, I think tax returns should be public, at least for all politicians/state employees).
This way I am paying twice. Once for the police work, once with my privacy. If police cannot do their job - we disband them and create something better in their place.
But if you take away cash people will simply invent their own non-fiat currency to do their shady business or giving tax-free presents from grandma to grandson. In the end people will simply use silver and gold coins again, you can't just take away those.
But you can limit conversion of gold/silver into fiat money. I.e. to trade it on any exchange, you need to prove the origins.
In the end a mob boss does not want to own hundreds of kilos of gold he can only spend on illegal stuff. He wants clean currency or investments. Making the laundering much harder is one of the big reasons behind this.
Let anyone (any person, any company) have an account in the central bank and use that directly for payments. Let that and only that be "legal tender".
Then there would be no need for the government to do costly guarantees for depositors in private banks, no need for cash, no need for a costly blockchain and so on.
Taxes could be collected much fairer and efficient.
Negative interests rates could be implemented without distortions.
Logic dictates that it shouldn't work, anecdata suggests that it probably doesn't work (if it did, tax avoidance wouldn't be a problem), and I'm sure you can find actual well-researched real-world examples that it definitely doesn't work.
Hang on. You can't cite tax avoidance as evidence that voluntary taxation wouldn't work - it happens now, with 'compulsory' taxation, with rates orders of magnitude higher than would be required for a minimalist voluntary state.
For example when we (the LibertariaNZ) ran the numbers for New Zealand, we estimated the cost of providing Government - not social welfare or foreign intervention - to be $2500 per year per working adult.
In the absence of any other form of taxation, do you really think this would be impossible to generate in a voluntary system?
I'd argue you're right, though, if you're thinking of the level of taxation necessary for socialism.
So your main issue seems to be that you want to pay less taxes, not that you want taxation to be voluntary. I see that as an orthogonal issue.
I mean, sure, I don't want to pay taxes that finance the military. And fortunately, the state allows me to actually pay less taxes (in theory, at least; to be able to effectively exploit the loopholes, I would need to be much richer). But by saying, "I'll only pay for what I think is worth paying for", you're just moving democracy from "voting with votes" to "voting with money". I'm not sure why that would be any better than the current system.
Firstly, I don't think that coercive funding is ever moral. This means that the only moral way of funding Government is voluntary taxation. This is my primary objection - even if you kept all the current State apparatus intact, it would be a tremendous improvement to simply stop coercing people into funding it.
Secondly, I think the current level of taxation is outrageous, and that State socialiam (as separate from charitable safety nets) is a monstrous moral evil. Ditto the massive military expenditure in most countries - it has precious little to do with legitimate national defence in most cases.
Thirdly, restricting the scope of Government vastly reduces the scope for corruption. We most certainly have voting with money now, and the votes of the rich and "connected" are counted for a lot more than those of the plebs.
It's not so much a case of wanting to pay for what I think is worth paying for, as it's a case of wanting Government to be limited to a very particular set of functions, and to be funded in a way that doesn't involve threatening or practising violence against people.
There's more information about the Objectivist position on Government funding here:
Thanks for discussing this, by the way. My original comment is attracting the usual flurry of down votes, which I've observed is the normal response on HN for criticising compulsory taxation, Apple, or socialism. Not necessarily in that order ;-)
What I'm afraid is less bureaucratic and more efficient totalitarianism. The bureaucracy may actually be a safety mechanism: the government can't go to the extremes because it'd be buried in paper.
> Then there would be no need for the government to do costly guarantees for depositors in private banks
Why not? As long as banks operate on a fractional reserve basis (i.e. your bank can lend out your money, but you still "have it" in your account), guarantees are still needed, regardless of how money is recorded.
> Taxes could be collected much fairer and efficient.
Taxes being collected and taxes being fair are two very distinct, and mostly unrelated, concepts.
> Negative interests rates could be implemented without distortions.
Great, I really want someone to keep stealing my money.
Negative interest rates are about fighting deflation; in a deflation the surrounding society needs to produce a positive real return to the holders of the most riskless asset, cash. This is why it is an unhealthy state for an economy to be in. If you are cash less you can avoid this.
You can still buy all the gold coins, foreign money and so on you want; they are just not legal tender.
I am pretty sure the government can access to my bank statements at will. This setup will make it much more explicit what is (already) going on. Oversight would of course be needed.
I don't. The other person needs to have these things, as does the intermediary.
Bet you removing $10 & handing it over from my pocket beats all these in a time test.
While its cool to use those, not always. UK banks are nice in the sense you can transfer instantly/free but its more of a hassle entering the account number in (which isn't really that hard, but handing over cash is much easier).
I wouldn't bet any money on Western governments guaranteeing anonymity when it comes to electronic payments in this day and age. If such protections can be granted to cash, that'd be a win, in my opinion--even if it isn't a complete solution.
I wonder if the minister wants this right to be enforced at every shop. Should I always be able to pay cash for goods/services? What if I buy something online?
Card payments also have many upsides besides ease of use for the customer. Currently the Amsterdam transport company is planning to disallow cash payments in buses because of the many armed robberies of bus drivers.
It's amazing what has been written for public cameras and their privacy issues when at the same time your lovely government wants to know all your domestic purchases or even you to report them incomes you receive in other countries.
I am suspicious of their motives. They say it's to curb illicit trade using anonymous cash but I'm suspecting they will like the side effects of removing cash. People wouldn't be able to do bank runs as easily which would give even more leverage to the central financial planners using techniques like negative interest rates. I really think cash shouldn't be abolished until we have a decent alternative(maybe some crypto currency).
Motives are irrelevant, I think all the nut jobs that have been saying this for years, that the government wants to take away people's right to cash have been right all along.
1) When you get into financial trouble and are unemployable for some reason, there is no way for you to earn something on the side so you can feed your family and pay the bills.
You can only submit to social services. There was one case in Germany where social services threatened a women to cut off the payments if she didn't take a job as waitress in a brothel. This is an extreme example, but you get the idea why it is a always a bad idea to be dependant on some bureaucrat.
2) The only ways to earn money or trade is to take a job or create a business. As it happens the government controls what types of jobs and businesses are allowed. This is also bad for businesses as not every startup is being run from the very beginning like a serious business following all regulations. Often it is a side business that develops into something bigger.
3) A group of politicians decides to run a media campaign to demonise a certain profession or type of business. You can now expect that you get a special XX% tax or loose your money because how could you dare to be successful.
4) I imagine it is very nice for power hungry officials to know about every payment made and received by every citizen. Did you ever buy something (of course legal) that you wouldn't like everyone to know about? Well if you do something they don't like this might end up in the public.
5) it gets very hard to invest money in a way that prevents you from being taxed arbitrarily by the government. (for example haircuts) Even if you bought physical gold the government would know about this and demand you to give them a share.
- Enhance the tax base, as most / all transactions in the economy could now be traced by the government;
- Substantially constrain the parallel economy, particularly in illicit activities;
- Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment;
- Foster the adoption of new wireless / cashless technologies.
Cons:
- The government loses an important alternative to pay for its debts, namely by printing true-to-the-letter paper money. This is why Greece may have to leave the euro, since its inability or unwillingness to adopt more austerity measures, a precondition to secure more euro loans, will force it to print drachma bills to pay for its debts;
- Paper money costs you nothing to hold and carries no incremental risk (other than physical theft); converting it into bank deposits will cost you fees (and likely earn a negative interest) and expose you to a substantial loss if the bank goes under. After all, you are giving up currency directly backed by the central bank for currency backed by your local bank;
- This could have grave consequences for retirees, many of whom are incapable of transacting using plastic. Not to mention that they will disproportionately bear the costs of having to hold their liquid savings entirely in a (costly) bank account;
- Ditto for very poor people, many of whom don’t have access to the banking system; this will only make them more dependent, in fact exclusively dependent, on government handouts;
- We wonder if the banks would actually like to deal with the administrative hassle of handling millions of very small cash transactions and related customer queries;
- Illegal immigrants would be out of a job very quickly – a figure that can reach millions in the US, creating the risk for substantial social unrest;
- If there is an event that disrupts electronic transactions (e.g. extensive power outage, cyberattack, cascading bank failures) people in that economy will not be able to transact and everything will grind to a halt;
- Of course enforcing a government mandate to ban cash transactions must carry penalties. This in turns means more regulations, disclosure requirements and compliance costs, potentially exorbitant fees and even jail time;
- Banning cash transactions might even propel the demise of the US dollar as the world’s reserve currency. The share of US dollar bills held abroad has been estimated to be as high as 70% (according to a 1996 report by the US Federal Reserve). One thing is to limit the choices of your own citizens; another is trying to force this policy onto others, which is much harder. Foreigners would probably dump US dollar bills in a hurry and flock to whichever paper currency that can offer comparable liquidity.
> - Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment;
So we shall all sacrifice our private property rights. There is stuff I own and I do not care if someone wants to take it for the GDP. It is mine and it will have to taken by force.
I have to say coming from a former communist country I'm really sickened by the Socialist direction Western countries are taking today.
This proposal may be due to the increased calls to ban cash:
- Bloomberg: Bring on the cashless future [1]
- FT: The benefits of scrapping cash [2]
- Bloomberg: Europol Director Sees Case for Scrapping High-Value Banknotes [3]
- Handelsblatt: The death of cash [4]
- Norway's Biggest Bank Calls For Country To Stop Using Cash [5]
- Spiegel: Leading German Economist Calls For Cash Ban [6]
- Bloomberg: Citi Economist Says It's Time to Abolish Cash [7]
- Telegraph: Bank Of England Chief Economist Calls For Cash Ban, Urges Negative Rates [8]
And from a Morgan Stanley presentation, in which its head of EMEA equity research Huw van Steenis, points out [9]:
"What I learned at Davos: We should move quickly to a cashless economy so that we could introduce negative rates well below 1% - policy maker"
..adding: "One of the most surprising comments this year came from a closed session on fintech where I sat next to someone in policy circles who argued that we should move quickly to a cashless economy so that we could introduce negative rates well below 1% – as they were concerned that Larry Summers' secular stagnation was indeed playing out and we would be stuck with negative rates for a decade in Europe. They felt below (1.5)% depositors would start to hoard notes, leading to yet further complexities for monetary policy."
Everybody in these discussions always mention privacy, but there's an equally important consideration which seems to be often forgotten: reliability.
With electronic forms of money transfer, both the sender and the receiver need to have an account with some entity. There have been cases where pressure has been put on these entities to close someone's account, like for instance https://www.eff.org/deeplinks/2015/07/caving-government-pres... . With cash, there's no risk of someone closing your account, since it doesn't need one.
And, of course, there's the fact that all working electronic forms of money transfer I've seen are online; if the network is down, you can't do anything. Cash is offline.
As far back as 1995, the association of banks here in Portugal created the PMB ("Porta-moedas Multibanco") which was a chip-and-pin card made for small transactions, and which didn't require neither a bank account nor an Internet connection to pay for stuff.
One would load it on either an ATM (using your regular debit card) or an authorized shop (using cash), and the card itself would store the balance.
They eventually discontinued in 2006, since it didn't really caught on.
We have a similar system here in Germany (established in 1996) [1]. Still up and running and widely in use! (i.e. 141,2 million EUR loaded onto cards, 118,4 million EUR spent with the cards in 2013, see the German wikipedia page)
78 comments
[ 2.6 ms ] story [ 133 ms ] threadFor example all German 10 euro silver coins that were released between 2007 and 2010 are made from 18g sterling silver. <https://en.wikipedia.org/wiki/Euro_gold_and_silver_commemora...
After 2010, the silver price got too high so they first reduced the amount of silver in the coins to 62.5% and then got rid of the silver entirely.
With the current price of silver the silver in the coins is worth $8.158 (it was worth more than 10€ for a while).
On the other hand, negative interest rates have been prevalent for all of fiat history, thanks to monetary base and commercial bank money inflation. Negative nominal rates only make it more explicit.
Not really. Inflation happens when there is a real resources constrain. You are demanding more from the economy that the economy can produce. If you have doubts about this, just look into the result of the QE programs that have generated not inflation.
Negative rates don't need this condition and don't make really sense. First they push money in the system and then they pull money from the system, but everything continues the same.
In fact, negative interest rates can be seen as a way of avoiding doing the logical thing: fiscal policy and direct investment.
https://handup.org/giftcards
http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar...
In fact we need a broader constitutional right of privacy.
Are you sure you mean this statement in absolute sense, as in "I'd rather criminals got away with any nefarious deeds than give up any privacy"?
Or, may be, you have some sense of balance between these two things? If you have, what kind of balance it might be?
This is about power. Not about crime.
ex: http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-m...
In fact this makes me think of all the nice things we could have if support for simple mechanisms was legally required in various areas of life.
Everyone can understand pen and paper voting.
Luddite? Do you even know what this word means? There is currently no anonymous payment technology on this planet that works universally and everywhere.
In face of this reality, cash has its value for everyone that wants to pay anonymously.
This is true, but notice that the statement also cover cash.
There are some academic proposals and proofs-of-concept implementing anonymous electronic payments, but while they may prove worthy successors of cash, they are certainly not ready.
[1] http://www.daemonology.net/blog/2012-01-19-playing-chicken-w...
1) Instantaneous
2) Anonymous
3) Non blockable
4) Not centralized
I am all for technology which solves real problems, not for technology for technology's sake. If you create technological crap, I'm gonna luddite you.
- low effort - low interaction
that's it. I couldn't give two hoots about anonymity vs being able to contactless payment (although having to get my wallet out and hold it against the reader is definitely still too much effort...)
Some people prefer cash for a variety of reasons, self control, budgeting etc. Sometimes for various tax reasons. But I just don't see the evidence of the general public caring about privacy on this one.
That is police's problem. I am tired of LEO offloading their duties and costs of business to society.
In the end a mob boss does not want to own hundreds of kilos of gold he can only spend on illegal stuff. He wants clean currency or investments. Making the laundering much harder is one of the big reasons behind this.
Let anyone (any person, any company) have an account in the central bank and use that directly for payments. Let that and only that be "legal tender".
Then there would be no need for the government to do costly guarantees for depositors in private banks, no need for cash, no need for a costly blockchain and so on.
Taxes could be collected much fairer and efficient.
Negative interests rates could be implemented without distortions.
One fundamental thing about taxes is that, when enforcement of each and every law is not totally possible, totally unfair taxes are also not possible.
What you propose is totalitarianism, or eventually leads to it.
For example when we (the LibertariaNZ) ran the numbers for New Zealand, we estimated the cost of providing Government - not social welfare or foreign intervention - to be $2500 per year per working adult.
In the absence of any other form of taxation, do you really think this would be impossible to generate in a voluntary system?
I'd argue you're right, though, if you're thinking of the level of taxation necessary for socialism.
I mean, sure, I don't want to pay taxes that finance the military. And fortunately, the state allows me to actually pay less taxes (in theory, at least; to be able to effectively exploit the loopholes, I would need to be much richer). But by saying, "I'll only pay for what I think is worth paying for", you're just moving democracy from "voting with votes" to "voting with money". I'm not sure why that would be any better than the current system.
Firstly, I don't think that coercive funding is ever moral. This means that the only moral way of funding Government is voluntary taxation. This is my primary objection - even if you kept all the current State apparatus intact, it would be a tremendous improvement to simply stop coercing people into funding it.
Secondly, I think the current level of taxation is outrageous, and that State socialiam (as separate from charitable safety nets) is a monstrous moral evil. Ditto the massive military expenditure in most countries - it has precious little to do with legitimate national defence in most cases.
Thirdly, restricting the scope of Government vastly reduces the scope for corruption. We most certainly have voting with money now, and the votes of the rich and "connected" are counted for a lot more than those of the plebs.
It's not so much a case of wanting to pay for what I think is worth paying for, as it's a case of wanting Government to be limited to a very particular set of functions, and to be funded in a way that doesn't involve threatening or practising violence against people.
There's more information about the Objectivist position on Government funding here:
http://atlassociety.org/commentary/commentary-blog/4314-gove...
Thanks for discussing this, by the way. My original comment is attracting the usual flurry of down votes, which I've observed is the normal response on HN for criticising compulsory taxation, Apple, or socialism. Not necessarily in that order ;-)
Whereas in electronic surveillance and control...
Why not? As long as banks operate on a fractional reserve basis (i.e. your bank can lend out your money, but you still "have it" in your account), guarantees are still needed, regardless of how money is recorded.
> Taxes could be collected much fairer and efficient.
Taxes being collected and taxes being fair are two very distinct, and mostly unrelated, concepts.
> Negative interests rates could be implemented without distortions.
Great, I really want someone to keep stealing my money.
I don't understand from your reply how you think saving would work in a cashless environment experiencing negative interest rates.
I am pretty sure the government can access to my bank statements at will. This setup will make it much more explicit what is (already) going on. Oversight would of course be needed.
Its easy to give to someone to buy stuff for you or pay them back or save up pieces.
Electronic cash can't do everything it can do with as much simplicity.
Admittedly with larger amounts there's no doubt to the electronic system.
In Sweden its kind of frowned upon to pay in cash, which is weird.
I can do all of these things with Venmo, PayPal, Google Wallet, etc.
> Electronic cash can't do everything it can do with as much simplicity.
I find those online tools a lot easier to use and less cumbersome than cash.
Bet you removing $10 & handing it over from my pocket beats all these in a time test.
While its cool to use those, not always. UK banks are nice in the sense you can transfer instantly/free but its more of a hassle entering the account number in (which isn't really that hard, but handing over cash is much easier).
Card payments also have many upsides besides ease of use for the customer. Currently the Amsterdam transport company is planning to disallow cash payments in buses because of the many armed robberies of bus drivers.
1) When you get into financial trouble and are unemployable for some reason, there is no way for you to earn something on the side so you can feed your family and pay the bills.
You can only submit to social services. There was one case in Germany where social services threatened a women to cut off the payments if she didn't take a job as waitress in a brothel. This is an extreme example, but you get the idea why it is a always a bad idea to be dependant on some bureaucrat.
2) The only ways to earn money or trade is to take a job or create a business. As it happens the government controls what types of jobs and businesses are allowed. This is also bad for businesses as not every startup is being run from the very beginning like a serious business following all regulations. Often it is a side business that develops into something bigger.
3) A group of politicians decides to run a media campaign to demonise a certain profession or type of business. You can now expect that you get a special XX% tax or loose your money because how could you dare to be successful.
4) I imagine it is very nice for power hungry officials to know about every payment made and received by every citizen. Did you ever buy something (of course legal) that you wouldn't like everyone to know about? Well if you do something they don't like this might end up in the public.
5) it gets very hard to invest money in a way that prevents you from being taxed arbitrarily by the government. (for example haircuts) Even if you bought physical gold the government would know about this and demand you to give them a share.
Pros:
- Enhance the tax base, as most / all transactions in the economy could now be traced by the government;
- Substantially constrain the parallel economy, particularly in illicit activities;
- Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment;
- Foster the adoption of new wireless / cashless technologies.
Cons:
- The government loses an important alternative to pay for its debts, namely by printing true-to-the-letter paper money. This is why Greece may have to leave the euro, since its inability or unwillingness to adopt more austerity measures, a precondition to secure more euro loans, will force it to print drachma bills to pay for its debts;
- Paper money costs you nothing to hold and carries no incremental risk (other than physical theft); converting it into bank deposits will cost you fees (and likely earn a negative interest) and expose you to a substantial loss if the bank goes under. After all, you are giving up currency directly backed by the central bank for currency backed by your local bank;
- This could have grave consequences for retirees, many of whom are incapable of transacting using plastic. Not to mention that they will disproportionately bear the costs of having to hold their liquid savings entirely in a (costly) bank account;
- Ditto for very poor people, many of whom don’t have access to the banking system; this will only make them more dependent, in fact exclusively dependent, on government handouts;
- We wonder if the banks would actually like to deal with the administrative hassle of handling millions of very small cash transactions and related customer queries;
- Illegal immigrants would be out of a job very quickly – a figure that can reach millions in the US, creating the risk for substantial social unrest;
- If there is an event that disrupts electronic transactions (e.g. extensive power outage, cyberattack, cascading bank failures) people in that economy will not be able to transact and everything will grind to a halt;
- Of course enforcing a government mandate to ban cash transactions must carry penalties. This in turns means more regulations, disclosure requirements and compliance costs, potentially exorbitant fees and even jail time;
- Banning cash transactions might even propel the demise of the US dollar as the world’s reserve currency. The share of US dollar bills held abroad has been estimated to be as high as 70% (according to a 1996 report by the US Federal Reserve). One thing is to limit the choices of your own citizens; another is trying to force this policy onto others, which is much harder. Foreigners would probably dump US dollar bills in a hurry and flock to whichever paper currency that can offer comparable liquidity.
False! Checks still exist. Banning cash does not translate automatically to electronic-only. Banning cash means traceable-only.
So we shall all sacrifice our private property rights. There is stuff I own and I do not care if someone wants to take it for the GDP. It is mine and it will have to taken by force.
I have to say coming from a former communist country I'm really sickened by the Socialist direction Western countries are taking today.
- Bloomberg: Bring on the cashless future [1]
- FT: The benefits of scrapping cash [2]
- Bloomberg: Europol Director Sees Case for Scrapping High-Value Banknotes [3]
- Handelsblatt: The death of cash [4]
- Norway's Biggest Bank Calls For Country To Stop Using Cash [5]
- Spiegel: Leading German Economist Calls For Cash Ban [6]
- Bloomberg: Citi Economist Says It's Time to Abolish Cash [7]
- Telegraph: Bank Of England Chief Economist Calls For Cash Ban, Urges Negative Rates [8]
And from a Morgan Stanley presentation, in which its head of EMEA equity research Huw van Steenis, points out [9]:
"What I learned at Davos: We should move quickly to a cashless economy so that we could introduce negative rates well below 1% - policy maker"
..adding: "One of the most surprising comments this year came from a closed session on fintech where I sat next to someone in policy circles who argued that we should move quickly to a cashless economy so that we could introduce negative rates well below 1% – as they were concerned that Larry Summers' secular stagnation was indeed playing out and we would be stuck with negative rates for a decade in Europe. They felt below (1.5)% depositors would start to hoard notes, leading to yet further complexities for monetary policy."
[1] http://www.bloombergview.com/articles/2016-01-31/bring-on-th...
[2] http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e...
[3] http://www.bloomberg.com/news/articles/2016-02-08/high-value...
[4] https://global.handelsblatt.com/edition/354/ressort/finance/...
[5] http://www.ibtimes.com/norways-biggest-bank-calls-country-st...
[6] http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofi...
[7] http://www.bloomberg.com/news/articles/2015-04-10/citi-econo...
[8] http://www.telegraph.co.uk/finance/bank-of-england/11874061/...
[9] https://imgur.com/qnEwiha
With electronic forms of money transfer, both the sender and the receiver need to have an account with some entity. There have been cases where pressure has been put on these entities to close someone's account, like for instance https://www.eff.org/deeplinks/2015/07/caving-government-pres... . With cash, there's no risk of someone closing your account, since it doesn't need one.
And, of course, there's the fact that all working electronic forms of money transfer I've seen are online; if the network is down, you can't do anything. Cash is offline.
One would load it on either an ATM (using your regular debit card) or an authorized shop (using cash), and the card itself would store the balance.
They eventually discontinued in 2006, since it didn't really caught on.
[1] https://en.wikipedia.org/wiki/Geldkarte