A decade or more ago, I began to discuss with associates the possibility of governments and banks colluding to eliminate physical cash. Back then, the idea struck most everyone as poppycock, that governments could never get away with it.
I didn’t write on the subject until 2015, when several countries had begun to limit the amount of money a depositor could extract from his bank account. At that point, the prospect that central banks might conceivably eliminate cash was looking less like an alarmist fantasy, and it became possible to write on the nascent issue.
In a nutshell, today, in most of the world’s most prominent countries, the people who control banking are the same people who pull the strings in government. A cashless system therefore seemed to me to be a natural, as it dramatically increased both profit and power for both banking and government – an opportunity that can’t be passed up.
The Benefit to Banking
Some banks have been delving into negative interest rates, which is a euphemism for charging you to keep your money in the bank, so that they can loan it out for their own profit. You actually lose money annually by having it on deposit.
Of course, some people accept negative interest rates in order to retain the imagined safety of having their cash in a bank vault, rather than at home. Others tolerate it because they value the convenience of using ATMs and chequing.
But anyone else may simply decide to store their money at home and save the “reverse interest” charges.
But what if cash were eliminated? No one would have a choice. They’d have to have a bank account and use it for all transactions, or they couldn’t purchase goods or pay bills.
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