Why do we still use old-fashioned paper money? When everything else in society is going digital, shouldn’t paper and metal cash be consigned to the history bin? Electronic payments are quick, efficient, and don’t weigh down your wallet. In forward-looking Sweden, for example, only 20% of payments in shops are made using cash (well below the global average of 75%).

Proponents of a “cashless society” argue that paper money facilitates corruption, organised crime, and even terrorism. However, critics point out that electronic payments cannot be made without leaving digital traces, potentially allowing the government to snoop into our business even more than it already does. Also, transaction fees for small amounts can be prohibitive, and some people worry we would be making ourselves more vulnerable to cybercriminals and hackers.

Saving with cash is easier for many than with a credit card, the current right to a basic account in Europe can not prevent high fees for card payments and those in need do not have a card reader. However, the European Commission is planning a European-wide law to limit cash in 2018. Why? Are there reasons for this?

In 2016, the European Central Bank stopped producing 500 euro banknotes. In 2017, the Commission proposed an initiative to restrict cash payments in order to help tackle money laundering and organised crime. So, where does the Commission stand on this issue? We reached out to the European Commission for comment, and a spokesperson gave us the following statement:

[…] The Commission believes strongly that our economy needs and will continue to need cash. That said, it is true that certain high nominal value banknotes – most of which citizens never see in their daily lives – are particularly attractive to criminals. Some 30% of the bank notes in circulation are EUR 500 bank notes, although these are rarely used by citizens and businesses. The European Central Bank, which has exclusive competence in this matter, decided in May 2016 to phase out these notes, a useful instrument in the fight against money laundering, tax evasion and organised crime. The Commission is currently evaluating whether any action is potentially needed at EU level on limiting cash payments of very high value, as part of its Action Plan to strengthen the fight against the financing of terrorism. Several Member States already have such limits. If it were to be decided that action is taken on this matter, this would by no means limit the possibility of normal citizens to pay with cash.

What do our readers think? We had a comment from Marc, wondering why cash should be abolished. We took his question to Dorothea Mohn, who works as a team leader on financial services at the Consumer Center, a German consumer protection organisation. What would she say?

We, as a consumer protection society, see no good reasons for the abolition of cash but, of course, there are stakeholders who are interested in such a thing, such as banks. If we imagine there was no cash then, in the case of a financial crisis, consumers could not come up with the idea of ​​simply withdrawing their money and then placing it under their pillow or in a safe… The “bank runs” we have seen in other countries would no longer be possible. Negative interest rates also become more attractive if consumers cannot withdraw cash…

Of course, some businesses also support this idea, because if everything can only be paid digitally – and because digital transactions are not anonymous – you can harvest a lot of important and interesting data, from which you can build advertising and marketing strategies.

There are, therefore, many stakeholders in the economy interested in abolishing cash for their own benefit.

For another perspective, we also spoke to Carl-Ludwig Thiele, a member of the Deutsche Bundesbank’s board of directors who is, among other things, responsible for cash. What was his take?

Some economists argue that with cash transaction limits, monetary policy could be more effectively enforced, especially with regard to negative interest rates. For example, interest rates could be cut below zero, which would allow for additional stimulus to the economy, because people would spend their money rather than make it shrink. This argument may be correct, but the underlying intention is flawed: fundamental problems such as the growth and earnings weakness of economies cannot be remedied by cash transaction limits. To achieve this goal, other solutions must be found; the abolition of cash for monetary policy reasons is flawed.

Another reason to introduce a limit on cash transactions is reportedly to curb crime, tax evasion, and undeclared work. The Deutsche Bundesbank is not aware of any studies which have demonstrated the benefits of cash payment restrictions convincingly. The German Bundesbank is also not aware of the fact that there is less crime in countries which cash transaction limits than in Germany.

Should cash be abolished? Does it it help facilitate corruption and organised crime? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: CC /  Flickr – Aranami; Potrait Mohn – c Gert Baumbach; Portrait Thiele – c Manjit Jari


78 comments Post a commentcomment

What do YOU think?

    • Francesco Cuccio

      well good luck with paper money too in that event …

    • Vytautas Vėžys

      Francesco Cuccio We had crisis in Lithuania when 2 huge Banks collapsed without warning and took all people savings with them. Governments solution was to offer people to pray and wait… Some people were left for month without money… People still waiting for miracle.
      Meanwhile those who had cash reserves had no problems.
      And good luck offering your credit card to farmer selling fresh strawberries near road.

  1. Bruno Silva

    Why don’t we abolish thinking??? People are thinking to much about stupid ideas these days… Wtf?!?!

    • João Oliveira

      Your bank gone, your money go with…

  2. João Oliveira

    Who about abolish banks, we all know that they have the major responsibility on the 2008 crisis…

    • Ivan Burrows

      So not the idiotic politically invented Euro currency that means most of Southern Europe is still in crisis with millions of people suffering in the name of ‘ever closer union’ ?

    • João Oliveira

      Ivan Burrows have you ever heard about Iceland…?!

    • Francesco Cuccio

      João Iceland’s total population is about 1/3 of what you’d consider a SMALL city. Not exactly a model which scales well in any decent sized country.

    • João Oliveira

      Yes! But that little population, got more common sense than the rest of the EU population together…

  3. Любомир Иванчев

    It probably will become obsolete one day, but it needs to happen gradually by the development and evolution of technology and the financial markets. NOT by government regulation.

  4. Stran Ger

    Hopefully it will never happen… there is privacy in cash that digital money can never have.

    • Jakub Ušelík

      Gianandrea Uggetti and? :D I use electronic transactions for 90% of all payments. The rest is only because they are not accepting cards. I use secondary security layer for internet payments and my card for payments around the town is insured to protect me from thieves and such. Where do you have such a safety measures with cash? They get stolen? You are f*cked and cash in your wallet is not insured.

      PS: and I did not mention Scandinavian countries for example, where cash is a dying thing and electronic transactions are favored for event the smallest transactions. That wouldn’t be if it was unsafe.

  5. Blagovest Blagoev

    Definitely no, while digital transactions are pretty convenient most of the time, yet there are occasions where cash is pretty useful. I find it ridiculous to discard the option.

  6. João Machado

    If cash is banned, the moment governments start closing bank accounts of the ones that are vocal against them is the moment you will understand that freedom it’s not given, it’s taken.

  7. Marcel

    The only people that complain about losing money, are the ones with their money in the banks. Cash (although far from perfect) is independence.

  8. Zsolt Barczy

    Nothing to debate here. Cash will never be abolished, and shouldn’t be either. Next (stupid) question, please.

  9. Valter Conti

    PRAISE THE CASH: A PROCESS FOR A RESTORATIVE EUROPEAN MONEY CONSTITUENCY
    With much praise cash allocates the distribution of the value in the practice of coin-consumption with many forms of spending behaviour. The earlier statement of the cogito ergo “deliberative” is the archetype of the coin. Coin-archetype that pre-exists in a primitive form of a thought with the following features:
    1-Platonically is the ontological foundation of the anthropological reality that it represents the value in trade: that is the reason that causes it to be the global economic distribution in the world economy, there is therefore in the plural “forms” with which the Rule of Law Demiurge State have made it: papers bits and metals.
    2-As a consequence of the first point, the currency is also the epistemological foundation of reality relational values: a cause that allows us to think the world delivering it a diversified action, a brought of plural gestures that constitute the Executive ie of assumpting the right to knowledge for approve the right to life of proper currency in the life of the right to sovereign currency. In other words, the ontological cash pays the giving by way of repayment of the loan and how it differs like an epistemological foundation and constitutes the transit of democratic value without taxation.
    Constitutionalisation of the eurozone: two apparently opposing approaches.
    The basic dialectical framework of the current European policy is made in the debate of the two distinct forms of institutional organization between Eurozone (to be constitutionalized) and the internal market. This approach both still coming from limiting State vs Market paradigma, it can land to a more appropriate and mature resilient of dialectical commons in which the system of reserves of deposits reconfigure the former Article 47 of the Constitution safeguards between ex ante guarantees of liquidity of deposits and ex post warranty on the collateral of depositors.
    Ask to guarantee the collateral of depositors among other things permits to build flexible and progressive economic policies in the banking union framework without renouncing to market with countries outside the Euro with an eye to the prudential supervision regulation of swaps between euro area sovereign eurobonds and eurobonds of foreign emission; which, inter alia, not surprisingly its political aspect contingent in Brexit node.
    It is therefore necessary to imprint a discipline of financial markets with the banking union background that sees the main institutional players, the ECB, the ‘Eurogroup (for preliminary analysis) and Ecofin for the legislative proposal involved to entice big transnational liquidity heading to the ‘real economy. The whole course should be accompanied by a phase of tax breaks and regulations on the use of productive capital to cover its financial use it should, however, circumscribed by introducing the current accounts of the separate investment from those payments for all economic operators including consumers. The prospect of a new monetary order of the G20 with flexible exchange rates within a limited fluctuation and guaranteed by the central banks of the 20 countries that make up 80% of world GDP to avoid a looming currency war and providing the output from WTO (World trade organization) for those countries that do not join it, it can have a corresponding financial regulatory platform in the exchange trading of foreign sovereign eurobonds and eurobonds with the opt out from the euro for countries that do not adhere to the new treaty. All of course with the introduction of new long-term financial products by the ECB or long term Default Eurobonds and Unfaults Eurobonds by medium-term T-Cash Promissory Notes and Eurobonds Promissory T-secured Notes of governments as well as short term T-Bill and cash Secured T-Bill aimed at liquidity funding for enterprises. Basically if you will, in the general view, using the instrument of enhanced cooperation as a basic framework to complete a federal set-up phase maintain the prospect of decisive progress in the integration in the field of foreign and security policy, defense and immigration must also dissolve nodes on:
    -sharing sovereignty forms
    -limits of the Union’s method
    -intergouvernmentalism.

    -regarding sovereignty sharing forms is necessary to assess the status of the Committee of the Regions instrument to which the Maastricht Treaty entrusts the role of guardian of the subsidiarity principle and the Treaty of Lisbon to a guarantor of the same principle by recognizing the right to appeal to the court of Justice. Key issue to build a federal monetary sovereignty model whereby an ascending phase of strengthening economic and monetary union complementary to the banking union consolidation focused on the role of local self-government in the participation in the constitution of the currency reserves in liquid form for filing metal part of the forced currency.
    -Go past the limit of the Union ‘s method, thanks to the exercise of the power of political initiative of the European Parliament towards the Commission legislative action building a text of a transitory constitution Eurozone Protocol and therefore a less ambitious proposal of Duff (mainly oriented the consolidated domestic market) to reach a definitive constitutional treaty easy and understandable to be submitted to the ratification procedures.
    -The Political counterweight of intergouvernmentalism is activated by a special legislative consultation procedure of the European Parliament on the key issues of internal market exemptions, exchange collaterals on the Eurobond market and competition law in the freedom of establishment of non-commercial business and licences for the inclusion and integration of irregular immigration.
    At this point I would like to indicate, for a specific reform proposal, the regulated directions under domestic rule of law from which to build the said Constituent eurozone path :. Conversion of Italian sovereign debt through active reform policy in overcoming the ban commissory pacts.
    Certain goods are particularly tied to the fulfillment of certain certain debts; so that no other debt might reflect adversely guarantee payable to the Prince creditor especially in the case of constitutional legal interests like the money; you take that two legitimate reasons for refusal, the currency with the general privileges and transferable deposits with special drawing privileges or payment on the basis of faculties and practices recognized by the IMF to member states.
    It is proposed as the foundation of public credit system a possible post prohibitionist progressive constitutive civil law discipline hinged through the public money commissory provided introducing into. Good legal currency has two joints of protection: on the one hand the public faith, ie the trust and security of legal traffic; on the other, the specific interests that is a guarantee the authenticity and veracity of the explicit or through the public, that the agents and objects of the statements, which are subject to special credit in the relations of life in common.
    On the real economy level, add the traceability of m0 in the aggregate changes would allow for the proper structuring of the public credit system as a complement and advanced structural factor in the perspective of overcoming the tax system by precisely the Public Credit System. The special drawing criteria will exert against a mirror consideration given to guarantee traceability on the side of the depositor pushing among other things an active policy of sustainable surfacing of undeclared work and irregular work legalization. In essence the simple tracking of payments in general safeguard aggregate would add traceability of changes in the forms of cash collateral to the aggregate constituting the actual liquidity available in the deposits in current accounts dedicated to public utility services of local self-government, enterprises and individuals as Federal reserve assets.
    The agreement of forfeiture public money is a legal agreement by which the debtor State, ensuring the satisfaction of its debt, has his own good as currency of Citizens (nominal deposit fund for the protection of fundamental rights, background guarantee for payments and investment fund), with the understanding that the breach occurred, it said fine will go into properties of the citizen consumer lender.
    The “public” doctrine of the agreement of forfeiture has considered in the past that the foundation of his ban should be sought the state’s interest in that there are no conventional forms of settlement of the debt, as well as the protection of a “principle of public economic order” . In fact this principle pertains to civil law to a private credit system monopoly that traversed in the public finances derived from it has led to the current structural framework of sovereign debt crisis in the rule of law. So we see the paradox that produced translate paroxysmal public debt in the banking system for the purpose of private utilities through a moral hazard irresponsibility of the ruling class; It is subverted and the overriding public interest in the facts with the fulfillment of a real economic crime, continuing and persistent by the state against its natural creditors: the citizens.

    BOOK SIXTH – In the protection of the rights → → → Title III – financial liability, the causes of pre-emption, the preservation of the collateral and asset protection (arts. 2740-2906)
    Adding to the device. art. 2781 (bis) Civil Code
    Chapter II – Of the privileges
    If with claims carrying general securities privilege (such as eg. Cash deposits or bonds managed by Welfare instiutution) contributes a secured claim with no hereditary collation and one of the privileges is to be preferred over the exchange rate, this privilege competes with those others who can be appointed to guarantee the deposits with an option of special privileges, although grade posterity, to determine the social credit of the holder (the safeguard clause)
    Adding to the device art. 2787 (bis) Civil Code
    Chapter III – Of the pledge → Section II – Of the pledge and the shift of the movable property The monetary trust creditor is entitled to be paid with non-hereditary collating the thing received in exchange [2744, 2748, 2781 (a), 2788].
    The non hereditary collation can not claim if the value given in exchange remains in possession of the creditor or by third parties designated by the intermediary [2786] (1). When the special credit granted exceeds the sum of EUR 1, the collation is not hereditary does not take place if the change does not result from writing with certain date [1794, 2704], which contains sufficient indication of the credit and its non-hereditary collation (certificates exchange) [2800, 2806].
    But if the change results from filing other writing bodies, duly authorized, professionally perform fiduciary money on foreign exchange credit operations, the date of writing can be established by any means of the collateral evidence.

    The italian Banking Law article 11 paragraph 4 / A derogation from the prohibition to other hypotheses expressly collection permitted by law, in compliance with the principle of the protection of savings and specifically to paragraph 5: “it is still precluded from raising money on sight (ie through current accounts or savings deposits or in general funding contracts that provide for the withdrawal of funds at any time, without notice) and all forms of collection issue or connected to the management of means of payment in general marketability.
    The open to the public collection can then reconfigure thanks to this reform in the case of public credit through the vehicle of non-commercial activities (licenses and concessions for the common good with exrabancaria establishment of exchange and certification of collateral liquidity services),It was expected an adequate transition period for the passage from the old to the new financial intermediation market structure introduced by the Legislative Decree n reform. 141/2010. This reform provides for a transitional arrangement(Bank of Italy circular no. 288 of 3 April 2015) for those already enrolled in the general or special list referred to in Articles respectively. 106 and 107 of the Banking Act in the version prior to the amendments made by the Legislative Decree. N. 141/2010.

    Draft Protocol for a permanent enforced cooperation between Member States of the economic monetary union

    THE CONTRACTING PARTIES,
    WISHING
    to promote the realization of the objectives set by EU economic monetary union, to protect its interests and reinforce its integration process,
    RESOLVED
    to carry forward the process of ever closer union among the peoples of Europe in all forms in which it expresses the social economic asset value of the common currency liquidity,
    AWARE
    the need to enable Member States, actors of the first stage of economic monetary union , to take further steps of a stronger political integration,
    WISHING
    special provisions for enhanced cooperation between the Member States whose currency is the euro, so that the Euro will become a reserve, issuance and exchange currency in all its forms of liquidity for all Member States of the European Union, through coordinated plans for stability, growth and social cohesion, INDICATING
    the objective of achieving the establishment of a European Treasury to a government policy of inward investment for the single market to work alongside the derivative off-balance sheet activities of the EIB
    AGREE
    the following provisions, which shall be annexed to the Treaty on European Union.
    Article 1
    Member States whose currency is the euro, establish among themselves a permanent enhanced cooperation, as provided in this Protocol and provided that all these individual States will participate. Unless otherwise provided in this Protocol, they are subject to the provisions of the Lisbon Treaty relating to enhanced cooperation (Article 20 TEU and Articles 326-334 TFEU).
    Article 2
    Member States whose currency is the euro shall take all measures necessary to complete economic and monetary union. This requires completion of the double entry accounting (cash / bank notes) for all the decentralization federal services of members States. They may establish enhanced cooperation between them on matters of Union competence. States offer such initiatives to the European Commission, specifying the scope and objectives. These initiatives are communicated, for information, to the European Parliament and the Council.
    Article 3
    The Commission may submit to the Council a proposal. If not submitting a proposal, the Commission will inform the Member States whose currency is the euro, the reasons for that decision. The relevant provisions of Article 331 par. 1, of the TFEU are applicable. The decision on the Commission proposal is taken by the Council on the basis of the relevant provisions of the Treaty relating to the subject matter of enhanced cooperation and approval of the European Parliament. Only members of the Council representing Member States whose currency is the euro shall vote. Unanimity shall be constituted by the votes of the Member States whose currency is the euro. A qualified majority shall be defined in accordance with Article 238 par. 3 TFEU. As for the resolutions of the European Parliament on the Commission proposals, only members of Parliament elected in the Member States whose currency is the euro shall vote.
    Article 4
    The adoption of the euro by a Member State with a derogation implies adherence to enhanced cooperation already established between all the Member States whose currency is the euro. If necessary, the Commission shall adopt the transitional measures necessary for the application to the Member State in question of the acts already adopted within the framework of enhanced cooperation.
    Article 5
    This Protocol shall take effect until such time as there are Member States with a derogation to the Euro.

    • EU Reform- Proactive

      Dear Valter,

      You might be working towards a PhD in cash conversion? Well done! Too complicated & high for me though! Who is behind & architect of that scheme?

      Q: * Is that “proposal” the voters wish?
      Q: * Is it the well “respected” ECB & global central banks plus all big banksters?
      Q: * Is it the very liberal corp-orates & captured governments?
      Q: * Is it the uncontrollable & untouchable cabal of both- ganging up against the dumb & helpless voux populi?

      At first, THEY (“know it all”) explained to us the necessity of QE (“quantitative easing”). After flooding the globe with paper & making fortunes- THEY realize the mess and wish to counter by QT (“quantitative tightening”) confiscating the created surplus cash?

      It is bad, unfair, uncalled, criminal- just another Banksters scam!

      SHOULD there be a “serious” concern about illegal racketeering, collusion & corruption between “criminals” in governments, banks & corporations, the fraudulent use of tax havens (abolish them fist), the too common use of brown envelopes & all others tricks of THEIR trade, then-

      lets first see some high profile trials, convictions & harsh sentences of those VIP’s and the confiscation of their cash & repatriation to the rightful owners (mainly taxpayers)!

      Afterwards, voux populi should be part of the decision making process- globally- if they wish to become “partners in crime or ethnics of the highest order” in the manipulation and/or confiscation of their money.

      Be it as it may, the ever evolving technology and electronic convenience in handling “money” – by all- will reduce the cash circulation requirements quite naturally over time. Therefore:

      No need to FORCE cash out of circulation with one sided & undemocratic decisions by untrustworthy banksters, followed by (captured) government legislation to comply with their banksters friends wishes!

  10. István Simon

    I think it’s not necessary to lead out the coin and paper money. however the electronic money is more ‘handy’ . to using real money is funny (of course there must be enough to enjoy).

    I think the good democracy is always avoiding things to eliminate. of course, the harmful things needed to be puruit, meanwhile the money is not a harmful thing.

  11. Marcin Cieślikowski

    No, because we don`t want to give all power to banks. The price of money is created by banks, after we get rid of cash they can put all the cost they want on customers. It was in Poland for example for 20 years the credit card fee amounted to 3.5%, and all Europe was 0.5% or none. The government and the regulators can`t do nothing about it. Only the special law of the parliament has changed it.

  12. Kurt Weygantt

    No. Think of what extra power you’ll give to banks and governments … Do you really want them to know what you spend every penny on ?

  13. Luca Bennati

    No, obviously. Even if this is a rhetorical question given the fact that the roadmap has been already defined and the elite is proceeding on this. Blockchain is already here…

  14. Frans Borg

    whats next this is all shit of an idea WHAT has this big brain in mind ??? maybe suggesting useing toilet paper instead of paper money apart from joke this gives people questions and answers to think off nobody suggests anything for nothing who knows something fishy is going on

  15. Paul X

    Looking forward to seeing the first beggars with their chip and pin machines….

    • Mario Croatia

      YES!

  16. Ether Traveler

    Yessss!
    And abolish (I mean: I’m in, anyway) the whole monetary (virtual/not, digital/not) system with it!

  17. fuck you

    no
    The way technology works would make ecash (the new form of money) would make hackers much richer

  18. Z

    Those of you who said “No” : move far away from Scandinavia.
    It is bound to happen there first. That said , you may not be around when it happens. The overall world development is not yet ready for such a thing. If anything , cash is still a back-up plan for many occasions in civillian life.

  19. Mario Croatia

    Yes.We need to ban cash and implant chips on everybody so the globalists can have maximum control!What a great idea!

  20. Harry Bell

    Money has too much control of people already, the abolition of cash will give the banks and govts far too much control, you dissent, they turn off your money supply, no thanks.

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