The dash from cash - too rash!
Aug 5, 2019
Luckily, appreciation for cash as a public good has entered mainstream conversation - largely driven by inclusion and security concerns. The recent cashless ban-wagon movement, the Libra debate, the Capital One breach and the CyberRisk Reuters feature, have all brought the conversation about safe and democratic cash to the forefront of social debates.
Crucially, the discussion needs to take into account the public's concerns with emphasis. A recent article from The Economist titled, 'The Dash from Cash', focuses on how governments can intensify the shove towards cashless-ness, but stops short of questioning whether the transition is in the best interest of the public... which governments have a duty to safeguard (in theory).
'Everyday activities, like the purchasing of gifts and small private payments, become features fed into an algorithm. Cash, on the other hand, offers us a degree of privacy and anonymity.'
Cash is inclusive
Ironically, financial inclusion ambitions of the cashless variety often end up segregating the rich from the most vulnerable. Banknotes and coins are available to anyone and everyone, regardless of their social status, financial standing or creditworthiness. Cash does not involve fees and no registration is needed to obtain, spend or accept it. Cash is a distributed infrastructure which means: legal tender, use is free of charge and cannot be curtailed, no fees involved, neither in money nor in data. Over the past year, awareness about discriminatory cashless policies has fueled support for legal action.
In the UK, consumer charity Which? launched a petition campaigning for lawmakers to protect access to cash. In Uruguay, two political forces launched petitions to refuse a four-year law of 'mandatory financial inclusion' which threatens democratic values. Even in Sweden, the government passed a new law to ensure all bank branches handle cash after concluding that the dash to cash was actually... too rash.
'Denying these individuals access to basic products and services based solely on payment method borders on discriminatory.'
Cash is secure
Not everyone is on board with governments 'pocketing the rewards' by selling customer data to advertising bodies. Charging premiums to be left alone is not the way. Instead of phasing out cash and turning privacy into a luxury, we must protect cash to keep privacy a default right.
Cash also serves the public by safeguarding personal freedom and independence which, by default, also entails the privacy and protection. When Facebook announced its controversial Libra project (described as an 'alternative global currency'), critics where quick to point out how little credibility Facebook has following the 2017 Facebook–Cambridge Analytica data scandal.
“Facebook coin will do for money laundering what Facebook did for fake news — likely lead to an explosion in terrorist financing,”
A recent Reuters feature, sponsored by IBM, "Cyber Risk", unpacks some of the most worrying aspects of being trapped in a cyber prison - which, in a cashless world, would become a reality. Whether it is on an individual, a business level or national level, keeping unhackable cash is the most secure escape from being totally crippled by cybercrime.
Why dash to keep cash?
The Economist article suggests that governments must first maintain banks' obligation to keep customer information private, but how can governments on a cashless mission demand banks ensure customer security when they are failing to protect against security breaches themselves? As Reuters reports, cybercriminals have managed to infiltrate even the most secure bodies of government including NASA, the CIA, the Federal Reserve and even Military departments. Incarcerating the public into a cashless society means removing the one escape from financial institutions and a backup when systems crash or are hacked.
A reliable level of independence from financial systems is a basic human right and also one that guarantees anonymity. Therefore, society is able to function peacefully even when tempers are high. Celebrating the existence of non-cash payments is one thing but asking for the elimination of the only universally accessible physical money is another matter. By maligning cash the Economist article is pushing for private players to take over - which curtails every citizen's rights in so many ways.
...governments should maintain banks’ obligation to keep customer information private, so that the plumbing remains anonymous. Digital firms that use this plumbing to offer services should be free to monetise transaction data, through, for example, advertising, so long as their business model is made explicit to users. Some customers will favour free services that track their purchases; others will want to pay to be left alone.
Ultimately, this solution seems unlikely. With cyber security breaches becoming a 'fact of life', focus should be on reducing dependency on unreliable online networks, easily done with cash, rather than ushering the public into economic incarceration over a 10 year period all while governments 'pocket the rewards'.