A summary of the top cash stories of 2017
Last year was packed with cash-related headlines. Once an obscure topic, the cash debate is now a household conversation, covered by news outlets such as the BBC, the Financial Times, Forbes, Reuters, Bloomberg, CNNMoney, Forbes, Reuters and Business Insider among others. Why? Because #CashMatters.
In a nutshell, the cash debate refers to the ongoing discussion about whether or not cash should be abolished.
Those who argue that cash should be abolished, tend to focus on the association that cash has with tax evasion, crime and terrorist funding. However, this is a weak argument as there is almost no evidence concluding that abolishing cash will put an end to any of these crimes. Law-breakers would still run wild but they'll thrive in the shadows of the cyber realm while law-abiding citizens stand to lose their financial independence with just one click.
Did you know that terrorism financing can occur via websites like eBay? Recently, a New Yorker was indicted for using cryptocurrencies for terrorist funding. Download our white paper, Keeping Cash for clarity on the cash-crime misconception.
Cash supporters argue that the most widely accepted payment option should always and rightfully be available to the public. They believe that the demise of cash should only occur if the people choose to stop using it but not as a result of artificial incentives forced upon the public by self-interested policymakers.
By 2017, the number of financially excluded people dropped by half a billion.
However, while two billion people remain unbanked and out of mobile reach, imposing a universally cashless policy would still result in financially excluding 20% of the world's population.
Although there is nothing wrong with introducing new payment options (online transfers, smart pay, digital currencies, etc), inflicting a no-cash policy means alienating a significant proportion of people as well as robbing the entire population of their right to conduct their personal business privately.
The best metaphor for visualising the impact of a cashless world comes from journalist Brett Scott, who has concluded that while the digital payments industry tries to cast cash as the horse-drawn carriage of payments... cash is the bicycle:
Catch up: The Guardian 'Hang on to your cash, This dash to digitise payments is dangerous'
The bicycle, though, has remained stubbornly persistent, despite the car’s greater speed, distance and carrying capacity. That’s because the bicycle is more efficient in certain contexts, and requires lower maintenance. Cars have come to cause congestion, pollution, accidents and urban sprawl, and nowadays we see the simple bicycle as one solution to the problems caused by the “superior” car.
India's government imposed brutal cash restrictions through a failed cash ban experiment
A radical demonetisation policy was announced near the end of 2016, yet its tragic impact resonated throughout 2017. When a whopping 85% of the subcontinent's paper currency was deemed useless, the economic faux pau signed countless death sentence.
Helpless parents who could not buy food or emergency medical treatments turned to suicide, financially excluded wives met blows from frustrated husbands and the frailest dropped dead from fatigue while queuing for hours on end. The government scrambled around, updating already confusing restrictions over the following months. Prime Minister Modi's demonetisation failure should be considered as more than a pinch of salt in the cash debate.
Meanwhile, private companies launched their own war on cash.
A very wise and particularly influential Chicago Alderman disagreed with the exclusionary influence of cashless fooderies in his state and so submitted a bill to ban cashless policies. When Alderman contacted Visa about their exclusionary campaign, Visa claimed that businesses participating in their Cashless challenge are not necessarily required to go refuse cash entirely. Mmmh...
"A 'no cash' sign is a 'not welcome' sign for many without ready access to credit, including those who are low- or fixed-income, homeless, undocumented, young or victims of identity theft,"
To sum up, the forces pushing towards cashless future come from:
- governments seeking more control over their citizens and
- private companies seeking to profit from a privatised payment system.
Who's left to fight for the public's right to privacy and freedom?
The short answer? The public.
'Cash consumers [of the world] arise, band together... You have nothing to save but your freedom, your desire to push back and your precious, affirmative and personal right to consent, or not to consent, before you are forced into contract peonage.'
Some suggest that ledger-based virtual currency might be a contender, and it is true that it promises unique attributes. Its decentralised structure would, in theory, prevent any form of centralised authority from abusing its power.
However, it fails in one key scenario: Power outages.
In the face of a natural disaster or war crisis, people rely on cash more than anything. Dissuading people from holding on to their contingency payment plan would leave them ill-prepared when they most need to be.
"Bitcoin is successful only because of its potential for circumvention. It doesn’t serve any socially useful function”
Catch Up: CNNMoney 'Bitcoin mania: 'What the big names of finance are saying'
Regarding the virtual currency craze, naysayers far and wide offer insightful expert warnings in a CNNMoney article. Goldman Sachs Chief Executive Officer Lloyd Blankfein cautions, “something that moves 20% [overnight] does not feel like a currency. It is a vehicle to perpetrate fraud," while Joseph Stiglitz declared that "it ‘ought to be outlawed".
The Cash Lobby fights back
As mentioned earlier in this article, Cash Matters published a White Paper titled Keeping Cash: Assessing the arguments on cash and crime, which explores how restricting cash use limits law-abiding citizens' freedoms while criminals go on to conduct their business via other channels. In today's digital age, cash serves as an economic lifesaver - and as such, is an irreplaceable contingency payment.
"Our mission is to provide a powerful and cohesive voice to keep currency a preferred payment choice."
It is true that consumer habit drives demand and has been increasingly smart pay and contactless inclined. But this is not true for the elderly or children who cannot manage bank accounts as easily, nor is it true for the digitally-excluded rural demographics.
There is no other payment as universal, resilient or timeless as cash.
FinExtra blog from January 2017
2015 can be written down as the year of awareness and noticing payment methods other then cash. 2016 was the year of financial services with greater technology with too much of Innovations thereafter trials and adoptions. In 2017 we will see...
Kenneth S Rogoff published a controversial book titled The Curse of Cash but critic Dr Jeffrey Rogers Hummel argues that "Rogoff’s case for confining currency to small denominations is, when not entirely mistaken, extremely weak" on the basis that such restrictions would result in more damage than good...
Common Dreams Org Corporate coercion and the drive to eliminate buying with cash
Excerpt: “Terrific!” say those consumers for whom convenience and velocity of transactions are irresistible. “This is nuts!” say a shrinking number of free-thinking consumers who are unwilling to be dragooned down the road to corporate captivity and coercion...
Reuters Commentary: Cybercrime isn't the only reason cash remains king
Excerpt: Cash, it seems clear, is dead. Or not. New research from the Cambridge Security Initiative shows that although exchange and currency markets are changing, secure, government-printed notes and minted coins remain hugely important. The group is run by former UK foreign intelligence chief Richard Dearlove.