Some good news and bad news from the war on cash. Let’s start with the good news.
The EU government, one of the main government entities spearheading the global war on cash, had announced that it was looking at imposing upper limits on cash payments (PDF). This was back in January 2017 and in view of that the European Commission, the EU’s executive branch, conducted a public consultation on the issue. 30,000 people responded.
The good news is that the vast majority of the respondents were decidedly unimpressed at the prospect of such limitations.
The results of the survey show that a whopping 95% of respondents said that they did not agree to a cash ceiling at the EU level.
And in answering the following question:
“How would the introduction of restrictions on payments in cash at EU level benefit you, or your business or your organization (multiple replies are possible)?”
99% of respondents chose the ‘No Answer’ option (for some mysterious reason, there was no explicit denial option). Meaning that under 1% of respondents could even conceive of any benefits from having cash restrictions. 87% of respondents viewed paying with cash as an ‘essential personal freedom’.
Of course, we should keep in mind that 37% of respondents were from Germany while a further 19% were from Austria. Residents of both these countries are quite well known to have a high affinity for physical cash, even among millennials. Over two thirds of millennials in Germany prefer cash over electronic payment methods.
However, another 35% of respondents were French, where the government has already imposed a EUR 1,000 maximum cash limit. This is even more encouraging because it means that even in a country where cash is already restricted, the respondents find further or even current restrictions unpalatable.
So that’s the good news.
Here’s the bad news: even as governments are realizing that the common citizen is opposed to cash restrictions, they are looking to nudge the move toward a cashless society through the private sector.
Here’s what the IMF suggested to governments looking to ‘de-cash’, without explicitly coercing their citizens through policy decree.
The private-sector-led de-cashing seems preferable to the public-sector-led decashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee), but still needs policy adaptation. The latter seems more questionable, and people may have valid objections to it. De-cashing of either kind leaves both individuals and states more vulnerable to disruptions, ranging from power outages to hacks to cyberwarfare. In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash. A targeted outreach program is needed to alleviate suspicions related to de-cashing; in particular, that by de-cashing the authorities are trying to control all aspects of peoples’ lives, including their use of money, or push personal savings into banks.
By co-opting the private sector, governments will be able to slowly incentivize electronic payment methods while penalizing cash payments. The IMF’s solution is to nudge instead of force, something that is clearly preferable to direct government intervention – nevertheless, the desired result remains.
In a recent example of such a policy coming into effect, VISA has rolled out an initiative to provide $10,000 to 50 eligible businesses who commit to entirely refusing cash payments. Eligible businesses are small business restaurants, cafes, and food truck owners. Imagine, you go down to your local food truck for a hot dog and you can’t even pay by cash!
And this is just the beginning….
Of course, as a credit card merchant, VISA has immense profit incentive to see a cashless society. And that’s what’s so worrying; when the private sectors’ profit motives line up with the government’s motives to control more and more aspects of our lives, how can we resist?
One thing remains clearer than ever – global governments want more control over our everyday lives and restrictions on cash are just one way they are exerting such control. As a fiat currency, cash is always open to manipulation by the government and central banks. That’s why intelligent investors diversify their portfolios into assets such as gold and silver that actually hedge against cash and retain their own value; regardless of government decree.
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