Going cashless or not: are Central Banks resigning facing private companies?

A surprising alliance is slowly coming together, in the global war on cash. Large internet-based companies and commercial banks are mixing interests with top-level governmental bodies to press for the disappearance of hard currency, and speed up the digital transition towards a cashless world. On the losing end of the intended shift, central banks which seem to be putting up feeble resistance.

The number of market participants, worldwide, who long more or less secretly for the destruction of hard currency, is rising so high it is getting hard to lose track of. Private banks are fed up with the high costs and low profitability of managing cash and its expensive security services. The European commission is slowly tightening the noose around cash and has decided, after killing off the 500-euro banknote, to limit the amount of currency citizens are allowed to carry.

Fiscal agencies around the world fantasize about a world where all monies could be monitored on a screen and detected by automated servers. Indian Prime Minister Modi nearly destroyed his own economy, attempting to shake cash-owners down from their secret savings. The EU Commission discretely published its anti-cash measures on its website: “The establishment of a common cash control strategy upon entering or leaving the territory of the EU was a decisive step in the EU policy aimed at the strengthening of measures to prevent money laundering, terrorist financing and other illegal activities. The EU legislation implements Recommendation 32 (R 32) of the Financial Action Task Force (FATF) on cash couriers at EU level.” Cash has many enemies, threatening its wholesome existence.

Not the least of them are Internet companies. Ever since it has become accessible to the general public to carry out their everyday operations using their smartphones and tablets, cash has been on a slow decline. Euro Monitor reported in the end of last year that they “released new consumer finance industry data. According to the new research, consumer card payments will surpass cash payments for the first time in 2016, registering USD $23.1 trillion globally.” GAFA companies (Google, Amazon, Facebook, Apple, and the likes) look fondly upon the possibility that currency’s demise would go all the way into fiduciary oblivion, and spare no effort in their lobbying towards economic and political organizations. The more cash disappears from our economies, the more money falls into their virtual pockets. Every marketing expert knows it, every cash pound is worth two online quids. Helen Nugent, reporter for the Spectator, says it better than all: “There’s the lure of online shopping sites: ASOS, Amazon, you name it, they’re there at the click of a button. Ordering online can be dangerous. It doesn’t really feel like spending money, particularly if you have a debit or credit card set up already. All it takes is a few seconds to spend hundreds of pounds.”  So to their eyes, the quicker cash dies, the better. Is there no one to defend hard currency?

“One would have imagined that central banks and mints would be the first on the barricades to defend the national symbols bequeathed upon them.  But so far, they haven’t rallied to the symbolic bugle”

Central banks are responsible for national and regional currencies, a crucial role they have always taken on, ever since currencies have existed. Throughout history, not only were they in charge of maintaining economic stability, but also the global reputation of their coins and banknotes. This was done through their ability to fight off counterfeiters, and the care brought to the economy behind the currency. But also, and this is no secondary task, they were in charge of the symbol embedded within the cash. British pounds display the face of their monarchs, euros illustrate continental architecture and the mighty American eagle spreads its wings across the green dollar bill. The 20th century is rife with examples in which countries drastically changed their position in the world, for better or for worse, through their money.

And yet, even for the keenest eye, surfing on the world wide web, the only substantial opposition to the war on cash seems to be coming from civil rights activists, who oppose the mercantile agenda of GAFA companies and the freedom-killing projects of governmental bodies who slowly let themselves drift towards a nice, secure and regulated Orwellian society. Even the almighty American Federal Reserve seems to be bullied around by the governmental layer, as Financial Times editor Wolfgang Münchau reports: “You would struggle to find a more potent symbol of the changes that await our liberal economic order than a letter written by Patrick McHenry to Janet Yellen. The vice-chairman of the US House of Representatives financial services committee questioned the right of the chair of the Federal Reserve to negotiate financial stability rules “among global bureaucrats in foreign lands without . . . the authority to do so.”

Are central banks resigning their centennial watchdog role? Have we given up on our national identities so much that our mints no longer feel entrusted with the task of making us proud of our economies? Do GAFA companies only have to push a tiny bit harder and dig a little more into their gigantic pockets to entrap us into their online markets? Clearly, the part of the population which does dig into this subject, which anti-cash supporters are trying hard to keep off media radar by not going too fast, is fighting the fight on its own. One would have imagined that central banks and mints would be the first on the barricades to defend the national symbols bequeathed upon them.  But so far, they haven’t rallied to the symbolic bugle.

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