University research has described the ‘war on cash’ and issued a dire warning.
COVID-19 has been used by financial institutions to spread false messaging about cash and herd people into digital payments which are harmful to society.
That is the message from research out of the University of Rostock (in Germany) by Professor Doris Neuberger and Dr Edoardo Beretta. They describe an institutional ‘hostility to cash’ driven by banks and supported by governments.
The researchers say restricting or eliminating cash “is synonymous of welfare losses due to increased monopoly power of the financial and technology industry, reduced privacy, and threatened financial stability as a public good.”
The consequences of eliminating cash include more social discrimination and more financial exclusion leading to more inequality.
COVID-19 has led to “false messages about banknotes spreading the virus as a new instrument of convincement.”
Meanwhile COVID-19 has created a “flight to cash [that] shows that this ‘relic’ is even more essential in bad economic times.”
Visa has had a campaign called “Cashfree and proud” to “persuade British consumers that contactless was better than cash.”
Mastercard has issued ‘research’ claiming that people prefer contactless payments and Mastercard’s Executive Vice President, Sandeep Malhotra has made statements regarding the “the dirtiness of cash.”
Mastcard says ‘8 out of 10 people in a worldwide survey are going contactless,’ but Mastercard’s survey of 17,000 is a collection of online responses from young, affluent Mastercard contactless card users.
Banknotes and coins are a public utility, which can’t be used by banks and the financial sector to earn profits say Neuberger and Beretta, so, it is understandable that they’re “interested in pushing consumers towards private digital money.”
“In order to achieve this result smoothly, individuals should be convinced that they are “choosing” (i.e. “preferring”) digital payments.
“This approach also resembles how several supermarkets inspire young consumers to “choose” sweet and/or unhealthy food by placing it at eye level by the checkout counters.
“Once an adaptation process has begun, compliance becomes the most likely outcome.”
No that is a myth from the past. Cash does not encourage the ‘shadow economy.’
Neuberger and Beretta say “large-size banknotes do not – at least, in the period before and after the legal introduction of the Euro – incentivize the shadow economy.”
There is plenty of other evidence to suggest that criminals and drug dealers have already migrated to crypto currency and largely unregulated online transactions.
Influential Reuters editor (finance and markets) and columnist Mike Dolan recently described how central banks are risking pushing criminals and the shadow economy deeper into the darkness.
If governments continue to push Central Bank Digital Currencies (CBDC) – digital ‘cash’ - they are likely to force the shadow economy to crypto currencies.
A big issue for governments, says Mike Dolan, is the extent to which the shadow economy is already going there. The recent explosion in the value of Bitcoin and other crypto currencies is partly pricing in this possible future.
Blockchain researchers Chainalysis reported that US$10 billion of crypto currency transactions in 2020 were connected to criminal activity and US$21.4 billion in 2019, or 2.1% of all cryptocurrency transactions.
US Treasury Secretary Janet Yellen told a financial innovation conference (in February) that "Cryptocurrencies have been used to launder the profits of online drug traffickers; they've been a tool to finance terrorism.”
A “mixed” payments system made of digital and physical means of settlements (cash) is “still up-to-date” say Neuberger and Beretta, “with cash representing the epitome of store of value (excluding gold).”
In April 2021, influential financial industry newsletter BankingDay.com reported that:
“Spruikers of the cashless economy myth were thrown another curveball on Monday after a five-hour outage at Commonwealth Bank forced mobile wallet users to converge on branches and ATMs to get cash.
“Social media platforms reported chaos at petrol stations and supermarkets across the country as thousands of mobile wallet users were stranded by the outage.
Continuing failures of bank systems and cashless payment systems that leave people unable to access their money or make purchases reveal the inherent weakness of the ashless digital economy. It relies on power - electricity and data connectivity. A failure by one of these systems will leave shoppers and retailers stranded.
Cash on the other hand is trusted and reliable. Cash is clearly a public good that must be safeguarded as private interests seek to undermine it. A mixed payment system is the future where consumers get to choose how to they pay.
Buy Now Pay Later users are missing meals and essentials to pay their debts, more government data has confirmed.
Don't believe the FAKE NEWS. Australia is NOT going cashless and other advanced economies are not going cashless either.