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, the proportion of payments made with cash has fallen over the past decade from around 40 per cent to less than 10 per cent.
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.
What do our readers think? One reader, Nardo, sees only advantages in cashless payments. Among other things, he thinks digital currency would be safer, more convenient, and cheaper for the state (since he says producing money is expensive). Is Nardo right? Are there indeed only advantages to switching to digital payment systems?
To get a response, we put Nardo’s comment to Stefan Hardt, Director General of Cash Management of the Deutsche Bundesbank. What would he say?
I wonder where Nardo gets the idea from that non-cash payments are really safer and more convenient? I think that’s a bit subjective. Maybe others will feel differently. In this respect, I would simply question it critically. But I think one point is very important: that technical disruptions – recently there have been warnings of blackouts – can at least not be ruled out. And we can say that there is actually only one means of payment that works even in the event of technical disruptions. And it doesn’t matter whether it’s a power failure, a hacker attack or whatever. Only cash works in these cases.
It is no coincidence that the German Federal Office of Civil Protection and Disaster Assistance asks the population to have cash at home as a precaution in such cases. That’s why I think that looking only at convenience is perhaps a bit short-sighted. That is one thing. Secondly, yes, of course it costs the state money, there is no question about that. Cash and cash payments are a public good and that costs the state money. All state tasks cost money, whether it is internal and external security or the construction of roads. Public tasks cost the public money. In this context, it would be important for me to simply say that non-cash payments also cost money, obviously. Not for the public purse, but in the end it ends up with the consumer. The costs are borne by the merchants, who certainly pass them on in their price calculations. In this respect, we pay it as taxpayers in the one case and as consumers in the other. So I think you have to go a bit deeper to be able to really judge that. I think Nardo has made it a bit too easy for himself.
We had a comment from Marc on Twitter, wondering why cash should be abolished. Back in 2017, we took his question to Dorothea Mohn, who worked as a team leader on financial services at the Consumer Center, a German consumer protection organisation. Here’s how she responded back in 2017:
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.
Next up, we had a comment from Martin: “Never ever should cash be abolished! Such a step can hardly, if at all, counter the dangers of terror and crime.”
How would Stefan Hardt respond?
Well, due to my professional role, but not least for personal convictions, I am a fan of cash. But if we are completely honest, we cannot hide the fact that cash is also misused. That’s true, of course. The point here is really just to say: there is no evidence that there is a connection between crime and cash. In other words: If we were to abolish cash today, there would still be crime and terrorism. Anyone who wants to enrich themselves in an illegal way will still want to do so after the abolition of cash and will find ways to do so. In this respect, I share Martin’s opinion.
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!
Mr Stefan Hardt is spot on!
Should the DE/EU want to ride the “abolishing wave”- one question would be please can/could you (at least try) to “abolish bad ideas”?
• Building too many ‘air- castles” = ‘Luftschlösser- including political ones.
• Naively relying on one major supplier of non-renewable energy for ~40% of one’s total requirements, because it is believed to be the cheapest option of all times- never to be repeated in the earth’s history.!
• “This includes learning how to make the most of the hand you are dealt, paying close attention to other players and their betting patterns, and whether they are bluffing or not.”
• Ignoring the electorate- time & time again- assuming they are all dummies and it’s a waste of time to consult them.
• Continue to forge ahead to create an EU army (even ignoring NATO) by testing the waters- (step by step)- with the creation of a 5,000-strong (voluntary women, men & robots?) “Rapid Reaction Force” and “EU military headquarters”. In order to rapidly enforce freedom in Europe and above all- EU laws.
• Ok, that’s enough for now- thank you!
Going totally digital poses significant risks. Imagine that government will decide how you can spend your money. For example, you can buy only 10 bottles of beer a month and when you want to buy 11th then transaction will be declined (despite you have enough money). Would this stop criminals? I don’t think so, at the end crimimals will find other valuables to trade instead of digital money.
No . Cash should not be abolished .
Imagine a bad hacker what kind of havoc can do with a person life and finances if are digital.
Or if you upset some important person from opposition ( party , religion organization , etc )
So … the freedom of a person is lost if everything goes digital.
There are elderly people who can only work with these machines.
The small business they have aims to socialize with other people.
( And I own a small business that sells POS and invoicing programs… 😉 )
Yes! No more tax evasion
how this will help..? I doubt it.
Not sure if there are benefits with withdrawing cash from the market …
Criminals had and will always find ways to “money laundry”.
In our days people don’t have too much cash on themselves due to other types of fears.
In our days we have to over protect our bank cards, credit cards, internet banking…
So criminals got more digitalized and technical than ever before… 🙄
Could you explain why you are opposed?
Paper money and coins are necessary to economic privacy and liberty of citizens. This why I am against its prohibition.
Well said- simply No!
Cash is obviously necessary for personal and patrimonial privacy and liberty
The question should be Why do we need old fashion banks when goverments can be both ?
Leave us in peace
I love cash; you see what you pay. with the plastic card you dont
Prefer a mix
No, if we have a black out, we will be poor
No. It shouldn’t be abolished. Cash means freedom. Money in the bank are not exactly yours.
Excatly, but EU doesn’t like freedom, at least not for commun people…
Well, I don’t know what to think about it! Paper cash is like gold, it is backing up the digital values.
If all it is needed for heckers is to enter the digital databases and change the numbers…
– Than what’s the point to even have money digital or not?
Cash money must never be abolished, cause it is not wisefull to cancell an alternative way of commuting and be hostage of an one-way digital commuting, that is exposed to the major danger of cyber invasion to the systems and within that frame create a new way of terrorism of the whole planet, the cyberterrosism.
The argument that in that way the states can extinguish terrosism or generally illegal commutings, seems to be annuled by the abovementioned strong contigent of creation new kind of uncontrolled terrorism the cyberterrorism, that can easily influence all kinds of commutes worlwide. Comlementary for those, who could oppose, that we have powerfull technology firewalls, i urge them to thnk of the cyber invasions that occured even in the digital premises of CIA, to realize that whatever can draw in the world of iconic images, can also be anuled, provoking a single economical and societal calamity !!!
You can not control cash, so you can not control people.
Anyone who argues for a cashless society should be tried for high treason.
It is true that there are criminals who juggle unregistered cash in the world, but they will always find ways to do it, if they want!
The cash also has value as a back-up for the digital values. If this will disappear, criminals will operate online as they already do it a lot lately.
No. Cash means freedom.
As early as in 2016, even mobile hawkers selling hot sweet potatoes on the street at Guangdong China were using mobile e-payment.