The idea of abolishing high denomination banknotes is more and more present in political talks around the world. The European Central Bank already announced the death of the €uro 500, tomorrow it might be the Benjamin ($100). What is next? Why do our governments want to get rid of cash and why don’t we have a word to say about it?
Larry Summers, a former Treasury Secretary and Harvard president has been pushing the U.S to ban both 50$ and 100$ bills. The official reason? Fighting against terrorists, drug dealers, bribers and other tax evaders. Because it is obvious that all of the bad guys will just surrender from their criminal activities if we take away the high denomination banknotes. “The notion that such evildoers as the Mexican drug cartels and ISIS will be seriously disrupted by the absence of the Benjamin–”These sacks of cash are too heavy now. Let’s surrender!”–is so comical that one has to wonder if Summers et al. are auditioning to write gags for Saturday Night Live.” wrote Steve Forbes for Forbes.
Yet it isn’t that comical any longer because the war on cash is already well engaged. Europe already lost the €uro 500 battle and many others could be lost before we realize that cash is so important and that it is our freedom that is at stake.
The simplified rhetoric that if criminals use cash we should ban it has proven its limits. It is used today once again and not too many seem to care. ‘Criminals use guns, let’s ban guns’ has been said before. Criminals also use cars, cell phones, computers, just like any law abiding citizen. But should we really have to pay the price of the admission of helplessness of our governments when it’s about solving illegal activities, by having to give up on our essential rights and freedom?
The ability to use cash is a freedom. The option to refuse to put your money in banks should be a freedom as well. The war on cash could very well start with big bills and then come to an end where using banks for each transaction or purchase isn’t a choice any longer. It could lead to a world where banks fees occur at every step of your financial life. Any purchase made, any financial movement, you have to go through your bank. Not only it will make the banks richer but you will lose any form of privacy.
Without stepping into ‘Big Brother’ theories, you soon realize that banks and Government (if they are granted access to data) can monitor all your financial moves, purchases, e-commerce and more. “A cashless society is a huge threat to our freedom and our democracy”, states famous Canadian Center for Research on Globalization. “A cashless society would certainly give governments unprecedented access to information and power over citizens. In Britain, the government has almost unprecedented access to citizen information already. The notoriety of GCHQ*’s technical abilities in its illegal surveillance systems need not be repeated here.”
But besides monitoring your daily financial activities, the idea is that policymakers and economic commissars can better control the economy. So far, cash can be hoarded, and it does make it difficult for the Government to know how much money you really have nor how you use it. So the policymakers believe that by getting rid of cash they will also get rid of their stagnant economy because it will make you to consume more and invest more.
That is also a myth. But banks do have the means to push you to invest in what they believe is good for you… or for them. Getting rid of cash could multiply their power to do so, and diminish yours.
The latest find for banks is negative interest rates. With high denomination disappearing, it makes it harder for you to hoard, or at least more expensive (you need bigger safes). “If people have to pay fees to store their money, as they do to put their stuff in storage facilities, then, by golly, they might be more inclined to spend it. To inhibit cash hoarding –when Japan announced it was imposing negative interest rates, the sale of safes soared– the authorities will want to do away with large notes.” says Forbes.
And this is no joke. “Introducing negative interest rates would create a powerful incentive to hold deposits in cash, most likely in higher denominations. Eliminating high-denomination notes, so that saving in cash was more inconvenient, would mitigate this problem.” says Grant Williams strategy advisor from thewaroncash.com.
Today some of the Nordic countries are considering being the firsts “cash-free” countries and they seem to care very little about the voices of their citizens who don’t want to lose that essential freedom.
The war on cash isn’t lost yet but citizens from across the world have to step up on that debate to ask their Governments to take a step back and look at it as a right for each citizen to have and not as a toy that bank can give or take away from you as they please.
* UK’s Government Communications Headquarters