20 July 2017
A Cashless Society
Is this really what we want?
By Lynda Goetz
Financial writers and commentators have, for some time, been warning of the plans by policy-makers to remove cash from the global system. American best-selling author and renowned economist Jim Rickards has even written an entire book on the subject, The Road to Ruin, in which he shows how the global power-brokers have already taken the steps to ensure that cash has a limited future. This, he explains, is not a conspiracy theory, just simple fact. For anyone who has had even half an eye on global economics, it is evident that this is true.
The European Payments Council (EPC), a subdivision of the European Central Bank, is not hiding the fact that they plan to eliminate all cash. This has nothing to do with the ‘burden of managing change and notes’, as the Danish government claimed when they proposed scrapping the obligation on retailers to accept cash as payment. The reason behind such moves is the ability to raise more taxes and to gain more effective control. In an article last December, Global Research set out very simply how and why the EU Commission wants this to happen and how in furtherance of these aims they have set up ‘The Single Euro Payments Area’ (SEPA) with the ultimate goal of eliminating ATMs and forcing everyone to use plastic cards or their mobile phones. The European Central Bank (ECB) stopped producing the high denomination €500 notes last year, with a view to no longer issuing them after 2018, on the basis that large denomination notes make crime and tax evasion easier. Many members of the public even seem to be buying in to the idea that ‘cash is for criminals’.
Outside Europe, the Indian and Venezuelan governments have recently made attacks on cash. Last November, as many will recall, Narendra Modri shocked the world and his own people by announcing that with immediate effect, the 500 and 1,000 rupee notes were to be ‘demonetised’. The cancelled notes had to be deposited in banks by the end of the year, with limits on withdrawals. At a stroke, this act eliminated 86% of the cash in circulation in the country. According to the Finance Ministry, the reason for this dramatic measure was fourfold: “To curb corruption, counterfeiting, the use of high denomination notes for terrorist activities, and especially the accumulation of ‘black money’, generated by income that has not been declared to the tax authorities.” Entirely reasonable aims, although others apart from the criminal element will almost certainly have suffered in an economy where the majority of transactions are cash-based.
In Estonia, by contrast, 75% of all transactions in 2015 were made digitally, according to New Europe Investor. Estonia was an early adopter of online banking, and use of cash is already rare according to visitors to the country. Sweden and Denmark are likewise rapidly heading towards being cashless societies. Card payments have until relatively recently made up the majority of non-cash payments, although phone apps have apparently taken off in spectacular fashion with Swish in Sweden and MobilePay in Denmark being used by over 50% of the population in each case.
The news this week that Visa plans to pay fifty small US businesses not to use cash, and that it hopes to use similar initiatives in the UK, rings alarm bells with a number of consumer groups. Last month Al Kelly, Visa’s chief executive, told investors that the company was ‘focused on putting cash out of business’. This is of itself unsurprising, but combined with government drives towards a cashless society does make the inevitability more imminent. The even more recent government announcement that the ‘rip-off’ charges made by many businesses to use credit cards will be banned from next year, whilst welcome, adds to the impetus towards the demise of cash. Many, particularly the younger generations, do not see this as a problem. Why indeed should it worry us?
The organisation Go Cashless does not think it should at all. Indeed, as their name proclaims, they consider that cash should go, their website declaring that not only is cash the currency of criminals and terrorists, but it is the currency of the ‘Black Economy’ (their capitals) and of tax evasion (I am not sure that these really are two different points); that it can be counterfeited and is ‘dirty and tainted’. On the other hand, if there is no cash it will undoubtedly be the case that financial companies will have all our purchases on record and that governments will have access to all those records. Furthermore, as we will have no way of taking our money out of the bank should we wish to do so, we could effectively find ourselves in the position of bailing out the banks when the next financial crisis hits. As Jim Rickards puts it ‘the money in your bank….will, in effect, become like jewels in a glass case at a museum’.
The argument that those who like to use cash are either tax-evaders or criminals conveniently ignores the fact that there are increasing levels of card fraud and electronic payment crime, and disregards the increasing sophistication of computer hackers and their ability to circumvent safeguards and security systems. Given the evidence of what happens when hackers manage to introduce a virus into supposedly secure systems or when a technical hitch causes total chaos to an organisation like British Airways, it does not seem a remote possibility that the entire banking system as well as all those relying on it could be crippled in very short order. The suggestion that it is only old people who wish to retain cash also seems to lack conviction. Granted, it is the case that many old people would be left in total confusion were cash to be withdrawn within the next few years, and it is equally the case that many younger people are more relaxed about the idea of reliance on a digital system. Nevertheless, such a divide is simplistic in its assumptions.
The volatility of Bitcoin has also been news in the last week. Could crypto-currencies be the answer to the loss of freedom which will be brought about by the demise of cash? Crypto-currencies like Bitcoin are not controlled by governments or any other central authorities so have given people a way of keeping part of their wealth digitally. Many are convinced that the move towards a cashless society is an unstoppable train, but the demand for currencies not controlled by governments could grow if it becomes clear that negative interest rates and the appropriation of funds in banks are a possibility. Of course it will not be that simple. Already, China and Canada are among the countries known to be working on digital coins of their own that could be used alongside the official currencies. As things stand at present, Bitcoin is not yet a viable alternative to cash. According to a CNBC journalist who tried living on bitcoin for a week (Living on Bitcoin), it is 40% more expensive than cards or cash (partly because of the need to go through third parties), time-consuming and also very limited in terms of where you can shop. Perhaps we should all give the matter some serious consideration before allowing cash to be declared obsolete. As Go Cashless says on its website ‘No legislation is required to end the issue and use of cash – just the willing cooperation of stakeholders’.
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