Cashless Economy

The deletion of cash will do little or nothing to tackle terrorist cells, which have an arsenal of fall-back solutions, such as ghost accounts, offshore accounts, hawala networks, foreign currencies, etc. A cashless society will simply impose on itself the totalitarianism which terrorists would otherwise bring. In the growing arsenal of State strategies to fight terrorism, fostering cashless societies has been hailed as a method to deprive terrorists of the most private payment system. With electronic money as the sole transaction medium, States hope to use the paper trail to track terrorist...

Payment tools which were, a few decades ago, reserved to the wealthy are now widespread, as banking and financial systems develop throughout the world. According to some, the development of electronic means not only warrants the termination of paper currency but would also enable further financial inclusion for impoverished masses. Yet, financial experts fear the potential backlash of such a theory, as recent examples have shown.

The prospect of making crime disappear has been addressed simultaneously with simply deleting other human woes, such as tax evasion and poverty, namely by economist Ken Rogoff. But just as going cashless would merely add more red tape to being poor, suppressing paper currency would do nothing to stymie crime. In fact, our increasingly cashless society has given birth to new, bigger, stealthier forms of crime.

It was Ken Rogoff’s most controversial theory: economies should ban cash in order to address tax evasion and place every single transaction on their radars. By doing so, the rich would no longer be able to hurdle suitcases packed with bills onto airplanes and fiscal justice would be resumed. But the theory has many holes.

Various economists are calling for the strong reduction of cash in order to boost economies and the efficiency levels of central banks. While the arguments make some economic sense, their implementation would come at a high political and democratic price. Must economies be privileged and take the lead on political freedom, at the price of unethical government practices?

Central banks are putting up remarkably little resistance in defending the currencies they issue, in the global war on cash. As cash prevalence slowly dwindles, private banks and payment solutions are getting closer to their goals, and central banks take a second-row seat to the show. But the demise of cash would relinquish them to the status of secondary players on the market and do disservice to the peoples they administer.

Banks are eager to press on towards cashless societies, with increased efficiency and margins in sight. The abolition of cash, however, will generate new hidden costs for the public, and place economies under a high risk, with all eggs in one basket.

Amongst the many arguments presented by anti-cash supporters, the environmental balance of banknotes. Would a cashless world better serve the planet’s interest? Not necessarily: banknotes have excellent footprints due to their durability and recyclability, while cashless payment systems simply hide their own.

The appearance of immaterial payment systems has increased economic convenience for citizens. From there, payment solution companies go double-or-nothing, promising that going full cashless would be even more convenient. But the inconvenience of going to an ATM will be quickly replaced by new, far more tedious ones, should the cash option disappear.