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The monetary institutions and political elite have been floating the idea for about 2 years now and it is only picking up steam that we will see the Western world move to a Cashless society.
Here is a list of pros and cons from an article at ZeroHedge.com:
When you look at the legislation that has been passed virtually worldwide, including Canada just 2 years ago, that sees depositors pay for a bank failure, this should make everyone cringe and feel uneasy.
They know what is coming. Governments are broke and banks are in trouble. They are doing everything they can to avoid actually fixing the system. All of these crazy, never done before ideas are to keep status-quo. Don't you think the following series of events is just piling on the insanity?
http://www.zerohedge.com/news/2016-0...ety-would-look
Here is a list of pros and cons from an article at ZeroHedge.com:
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.
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.
When you look at the legislation that has been passed virtually worldwide, including Canada just 2 years ago, that sees depositors pay for a bank failure, this should make everyone cringe and feel uneasy.
They know what is coming. Governments are broke and banks are in trouble. They are doing everything they can to avoid actually fixing the system. All of these crazy, never done before ideas are to keep status-quo. Don't you think the following series of events is just piling on the insanity?
“A depression is coming? Let’s put interest rates at zero. The economy is still in trouble? Let’s have the central bank print trillions in new securities. The banks are not lending? Let’s change the accounting rules and offer government guarantees and funds. People are still not spending? Let’s have negative interest rates. The economy is still in the tank? LET’S BAN CASH TRANSACTIONS!”
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