Today, Cash Matters published the white paper “Keeping Cash – Assessing the Arguments about Cash and Crime” by Dr. Ursula Dalinghaus. It is the most comprehensive approach to cash and crime to date, citing hitherto unknown sources and material and collating it in a way that enables new and fresh insights.
In the following interview for Cash Matters, Dr. Dalinghaus, a postdoctoral scholar at the Institute for Money, Technology & Financial Inclusion (IMTFI) at the University of California, Irvine, describes her most important findings and the conclusions she draws from these findings.
Cash Matters: Dr. Dalinghaus, if you had only one key takeaway to summarize the most important finding of your white paper on cash and crime – what would it be?
Dalinghaus: The most important finding is that there is little to no evidence to support the claim that restricting or eliminating cash payments will prevent terrorist attacks or financial crime. Criminals already make use of a diverse portfolio of payment technologies and types. Curtailing cash is going to do little to stop these activities, and it will end up hurting the vast majority of people who use cash for entirely legitimate reasons.
"As an anthropologist, I view money as bound up in relationships."
CM: What is new and different about this paper?
Dr. Dalinghaus: This is the most comprehensive and collaborative overview of the policy debate on cash & crime to date, drawing upon the most recent institutional, legal, scholarly, policy, news media and other sources including experts drawn from terrorist financing, banking, industry, and the social sciences.
The paper really aims to create a dialogue between the competing perspectives and generate new questions not typically taken up in the debate. For example, how exactly are people using cash in their everyday financial practices? As the payments landscape continues to change, what new issues arise with regard to security, privacy, stability and access to payment systems? What does cash do that other payment tools may not?
This is as an important question arising from IMTFI’s extensive research on mobile money in the developing world. Across very different payment cultures and infrastructures, we are seeing that people continue to view cash as complimentary. If anything, the intense focus on mobile money has shown that use-cases for cash are just as important for financial inclusion efforts.
CM: You are an anthropologist by training. In what way did your background inform your approach?
Dr. Dalinghaus: As an anthropologist, I view money as bound up in relationships. Physical cash, like other payment media, is much more than a means of payment. It is part of the fabric of people’s lives and serves many different purposes. Ultimately, when we talk about money, we are also talking about human relationships. So in characteristic anthropological fashion, I take a holistic approach to the problem of financial crime. Whether we are talking about cash or digital, multiple factors are at play and these simply don’t map on to particular payment media in any predictable way. Empirically speaking, anthropologists have found that one-size-fits-all solutions do more harm than good.
Policies that impact cash matter to everyone because a switch to an entirely digital payment system entails costs.
CM: What impact will your paper ideally have?
Dr. Dalinghaus: Ideally, the paper will have an impact on how we do research on cash. I hope it will foster a more publically driven and evidence-based dialogue on what measures can be taken in a broader sense, not only to address problems of financial crime or terrorist financing but to work towards protecting payments as a public good. If nothing else, the paper will have an impact if it succeeds in persuading readers to more carefully evaluate the claims being made for and against cash in this debate.
CM: This is a scientific paper on a highly specialized and sometimes technical subject. Why should anyone, who is not professionally involved, go to the trouble of actually reading it?
Dr. Dalinghaus: Cash is part of all of our daily lives—everyone can relate to a conversation on cash and payments. Cash requires little technical knowledge and is accessible to the illiterate and innumerate, to children and the elderly, and to those with otherwise limited financial means. It does not require electricity, Internet or network connectivity, a formal accounting system, or a third party to settle the transaction. Because of cash’s denominational and divisible qualities, consumers often prefer cash for budgeting, counting, and setting physical limits on what they can spend.
Cash is a foundational part of our current payment system and is an essential feature across the globe. This is true whether or not individual users have cash in their hands on a day-to-day basis. We have been handling some form of physical currency since at least 1600 B.C. Policies that impact cash matter to everyone because a switch to an entirely digital payment system entails costs. Many consumers may not realize the full costs of payment systems, what fees are charged to whom, and who is benefitting from the profits. From a societal perspective, we really don’t have a full picture of all the costs of digital systems. It is in everyone’s interest to have a better understanding about the interplay between cash and other payment forms. This paper is designed to be a good place to start in exploring these questions.