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Austrian Minister Calls for a Constitutional Right to Pay in Cash

96 points by randomname2 11y ago

tumdum_ 11y ago
It's a pity that franc is no longer backed by gold.
- efesak2 11y ago
  Is there usable currency which is actually backed by gold?
  - akerro 11y ago
    Libya was very close to get one...
  - Tepix 11y ago
    There are various coins made from silver or gold that are also valid currency. For 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_commemorative_coins_(Germany)> 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).
    - tumdum_ 11y ago
      There is also WIR https://en.wikipedia.org/wiki/WIR_Bank https://en.wikipedia.org/wiki/WIR_Bank which is backed by assets, but I think it's not targeted at individuals.
HappyTypist 11y ago
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.
- RobertoG 11y ago
  "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.
a3n 11y ago
Without cash, how will you give money to beggars?
- icebraining 11y ago
  By giving gift cards backed by an SV startup, of course! https://handup.org/giftcards https://handup.org/giftcards
- turbohz 11y ago
  They can accept card payments, just like this fellow. http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar-uses-card-reader-to-take-donations.html http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar...
- deleted 11y ago
  [deleted]
jmnicolas 11y ago
What we need is not the right to pay in cash but the right to pay anonymously. In fact we need a broader constitutional right of privacy.
- golergka 11y ago
  Are you sure that's exactly what you want? Including sums in billions of dollars?
  - onion2k 11y ago
    I'd rather criminals got away with their nefarious deeds than give up privacy, so yes.
    - golergka 11y ago
      > I'd rather criminals got away with their nefarious deeds than give up 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?
      - bjwbell 11y ago
        I do not want to give up any privacy. The stasi wasn't that long ago.
      - x5n1 11y ago
        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? This is about power. Not about crime. ex: http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-money-laundering_b_4619464.html http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-m...
LoSboccacc 11y ago
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.
- DominikR 11y ago
  Phones are used too to conduct shady business, so is encryption and generally all kinds of things related to privacy.
  - LoSboccacc 11y ago
    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.
- tomp 11y ago
  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).
- venomsnake 11y ago
  > Bags of cash are also the preferred way to conduct shady business. That is police's problem. I am tired of LEO offloading their duties and costs of business to society.
  - LoSboccacc 11y ago
    ehm, then again, who pays for police?
    - 11y ago
chvid 11y ago
I am kinda hoping for things to go the other way. 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.
- annnnd 11y ago
  ...and taking one's resources could be done in one swift move.
  - duncan_bayne 11y ago
    SWIFT move, heh.
- ptaipale 11y ago
  I'm not one of the trolls who oppose all taxation, but statements like "Taxes could be collected much fairer and efficient" scare the hell out of me. 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.
  - duncan_bayne 11y ago
    I oppose compulsory taxation, not all taxation, and I'm pretty sure I'm not a troll :-) What's your objection to my opinion?
    - tomp 11y ago
      Non-compulsory taxation doesn't work, see the "Free rider problem".
      - 11y ago
neximo4 11y ago
Cash is underappreciated today in the name of terrorist financing and etc. 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.
- winter_blue 11y ago
  > Its easy to give to someone to buy stuff for you or pay them back or save up pieces. 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.
  - neximo4 11y ago
    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).
moonshinefe 11y ago
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.
rrockstar 11y ago
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.
rnnr 11y ago
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.
- x5n1 11y ago
  And yet still forces you to file their taxes, despite having all the information available to them to simply send you a bill at the end of the year.
  - deleted 11y ago
    [deleted]
lifty 11y ago
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).
- x5n1 11y ago
  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.
DominikR 11y ago
A few reasons why banning cash is a bad idea: 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.
- randomname2 11y ago
  Also, from https://www.linkedin.com/pulse/cashless-society-erico-matias-tavares https://www.linkedin.com/pulse/cashless-society-erico-matias... 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.
randomname2 11y ago
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." [1] http://www.bloombergview.com/articles/2016-01-31/bring-on-the-cashless-future http://www.bloombergview.com/articles/2016-01-31/bring-on-th... [2] http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e953a0,Authorised=false.html?siteedition=intl http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e... [3] http://www.bloomberg.com/news/articles/2016-02-08/high-value-banknotes-should-be-binned-to-fight-crime-sands-says http://www.bloomberg.com/news/articles/2016-02-08/high-value... [4] https://global.handelsblatt.com/edition/354/ressort/finance/article/the-death-of-cash https://global.handelsblatt.com/edition/354/ressort/finance/... [5] http://www.ibtimes.com/norways-biggest-bank-calls-country-stop-using-cash-2276140 http://www.ibtimes.com/norways-biggest-bank-calls-country-st... [6] http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofinger-will-muenzen-und-scheine-abschaffen-a-1033905.html http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofi... [7] http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-says-it-might-be-time-to-abolish-cash http://www.bloomberg.com/news/articles/2015-04-10/citi-econo... [8] http://www.telegraph.co.uk/finance/bank-of-england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-economy-says-Bank-of-England-chief-economist.html http://www.telegraph.co.uk/finance/bank-of-england/11874061/... [9] https://imgur.com/qnEwiha https://imgur.com/qnEwiha
cesarb 11y ago
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-pressure-visa-and-mastercard-shut-down-payments-backpagecom 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.
- icebraining 11y ago
  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.
  - th0br0 11y ago
    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) [1] https://en.wikipedia.org/wiki/Geldkarte https://en.wikipedia.org/wiki/Geldkarte

96 points by randomname2 11y ago

tumdum_ 11y ago

It's a pity that franc is no longer backed by gold.

efesak2 11y ago
Is there usable currency which is actually backed by gold?
- akerro 11y ago
  Libya was very close to get one...
- Tepix 11y ago
  There are various coins made from silver or gold that are also valid currency. For 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_commemorative_coins_(Germany)> 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).
  - tumdum_ 11y ago
    There is also WIR https://en.wikipedia.org/wiki/WIR_Bank https://en.wikipedia.org/wiki/WIR_Bank which is backed by assets, but I think it's not targeted at individuals.

HappyTypist 11y ago

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.

RobertoG 11y ago
"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.

a3n 11y ago

Without cash, how will you give money to beggars?

icebraining 11y ago
By giving gift cards backed by an SV startup, of course! https://handup.org/giftcards https://handup.org/giftcards
turbohz 11y ago
They can accept card payments, just like this fellow. http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar-uses-card-reader-to-take-donations.html http://www.telegraph.co.uk/news/uknews/crime/11349189/Beggar...
deleted 11y ago
[deleted]

jmnicolas 11y ago

What we need is not the right to pay in cash but the right to pay anonymously. In fact we need a broader constitutional right of privacy.

golergka 11y ago
Are you sure that's exactly what you want? Including sums in billions of dollars?
- onion2k 11y ago
  I'd rather criminals got away with their nefarious deeds than give up privacy, so yes.
  - golergka 11y ago
    > I'd rather criminals got away with their nefarious deeds than give up 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?
    - bjwbell 11y ago
      I do not want to give up any privacy. The stasi wasn't that long ago.
    - x5n1 11y ago
      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? This is about power. Not about crime. ex: http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-money-laundering_b_4619464.html http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-m...

LoSboccacc 11y ago

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.

DominikR 11y ago
Phones are used too to conduct shady business, so is encryption and generally all kinds of things related to privacy.
- LoSboccacc 11y ago
  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.
tomp 11y ago
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).
venomsnake 11y ago
> Bags of cash are also the preferred way to conduct shady business. That is police's problem. I am tired of LEO offloading their duties and costs of business to society.
- LoSboccacc 11y ago
  ehm, then again, who pays for police?
  - 11y ago

chvid 11y ago

I am kinda hoping for things to go the other way. 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.

annnnd 11y ago
...and taking one's resources could be done in one swift move.
- duncan_bayne 11y ago
  SWIFT move, heh.
ptaipale 11y ago
I'm not one of the trolls who oppose all taxation, but statements like "Taxes could be collected much fairer and efficient" scare the hell out of me. 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.
- duncan_bayne 11y ago
  I oppose compulsory taxation, not all taxation, and I'm pretty sure I'm not a troll :-) What's your objection to my opinion?
  - tomp 11y ago
    Non-compulsory taxation doesn't work, see the "Free rider problem".
    - 11y ago

neximo4 11y ago

Cash is underappreciated today in the name of terrorist financing and etc. 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.

winter_blue 11y ago
> Its easy to give to someone to buy stuff for you or pay them back or save up pieces. 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.
- neximo4 11y ago
  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).

moonshinefe 11y ago

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.

rrockstar 11y ago

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.

rnnr 11y ago

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.

x5n1 11y ago
And yet still forces you to file their taxes, despite having all the information available to them to simply send you a bill at the end of the year.
- deleted 11y ago
  [deleted]

lifty 11y ago

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).

x5n1 11y ago
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.

DominikR 11y ago

A few reasons why banning cash is a bad idea: 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.

randomname2 11y ago
Also, from https://www.linkedin.com/pulse/cashless-society-erico-matias-tavares https://www.linkedin.com/pulse/cashless-society-erico-matias... 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.

randomname2 11y ago

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." [1] http://www.bloombergview.com/articles/2016-01-31/bring-on-the-cashless-future http://www.bloombergview.com/articles/2016-01-31/bring-on-th... [2] http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e953a0,Authorised=false.html?siteedition=intl http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e... [3] http://www.bloomberg.com/news/articles/2016-02-08/high-value-banknotes-should-be-binned-to-fight-crime-sands-says http://www.bloomberg.com/news/articles/2016-02-08/high-value... [4] https://global.handelsblatt.com/edition/354/ressort/finance/article/the-death-of-cash https://global.handelsblatt.com/edition/354/ressort/finance/... [5] http://www.ibtimes.com/norways-biggest-bank-calls-country-stop-using-cash-2276140 http://www.ibtimes.com/norways-biggest-bank-calls-country-st... [6] http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofinger-will-muenzen-und-scheine-abschaffen-a-1033905.html http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofi... [7] http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-says-it-might-be-time-to-abolish-cash http://www.bloomberg.com/news/articles/2015-04-10/citi-econo... [8] http://www.telegraph.co.uk/finance/bank-of-england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-economy-says-Bank-of-England-chief-economist.html http://www.telegraph.co.uk/finance/bank-of-england/11874061/... [9] https://imgur.com/qnEwiha https://imgur.com/qnEwiha

cesarb 11y ago

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-pressure-visa-and-mastercard-shut-down-payments-backpagecom 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.

icebraining 11y ago
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.
- th0br0 11y ago
  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) [1] https://en.wikipedia.org/wiki/Geldkarte https://en.wikipedia.org/wiki/Geldkarte