Cash is the enemy

Quite an opinion which I nevertheless like, but the total money digitisation must be balanced with the rights for the private life of each individual. If a regulator uncontrollably controls (sounds so-so) one's whole life then we may end up with a global North Korea.

In an era where banks have been fined billions for enabling money laundering via EFT, and cryptocurrencies facilitate crime totally electronically - blaming cash for crime is totally reality-defying. 

Biased and badly written nonsense, akin to saying 'If we install a tracking device, a government controlled CCTV cameras in every home, and place everybody under home arrest pre-emptively, we will eliminate crime'.

'Cash cannot be traced hence the preferred means of money laundering, funding terrorist activities and other illegal. illicit  and dark activities. '

Seriously?! What about the HSBC 2012 fine of 2012 for violation of AML regulation in Mexico? Was that cash as well?

The Dark Web and Silk Road - cash as well?

Global wide-scale tax evasion using off-shore locations? Cash as well, surely - worldwide, drug trafficers, warlords, dictators and tax evadors are known to travel to Belize with suitcases full of cash, of course.

Articles like this are making us sleep walk into a Global North Korea.

I agree with Brian. The statement by the ECB was I thought unhelpful and strange. There are many societal benefits to reducing the dependance on and usage of cash. Will it totally end all forms of money laundering? Of course not...could it help to reduce the black market economy and tax evasion? Yes, I really believe so. None of the proponents of cash seem to be able to explain why countries such as Denmark and Finland seem to be able to get along quite so well with such little usage of cash and such widespread usage of electronic payments.

As to the point made about HSBC...well...they were caught, and hit with massive fines to the tune of almost $2Bn!

For those that are "pro cash", how do you recomend tackling the black market economy and the tax evasion associated with it?

On behalf of the 'pro-cash' lobby: we propose to tackle all crime by the same means HSBC were caught, and in the same way any other crime is investigated and tackled: Good police/investigative work, regulation and proportionate measures that do not infringe on people's liberties and choice.

As a counter question: how do the 'pro-surveillance' people propose that we tackle offshore tax evasion, the dark web, terrorism and all other social ills?

How do we make our payment systems less vulnerable from hacking by rogue state actors such as North Korea, Russia or possibly even China? If Fake News was a problem in the US Elections, how will we guard against Fake Money?

And how do we ensure a functioning means of payment during natural catastrophes such as earthquakes, hurricanes, war, flooding, and the electricity grid being disrupted by the same rogue state actors?

Fake Money? Surely cash is very easily "faked" (counterfeited).

I'm not proposing being "pro-surveillance". I'm proposing to reduce the use of cash to end the ability of the black market to function quite so easily and thus to reduce the tax evasion associated with it. The time for "Good police/investigative work, regulation and proportionate measures" is surely long past...if that was going to solve the problem, it would have.

Assuming natural disasters that disrupt the electricity grid, how will ATMs work? How will people get the cash that you believe will be their saviour? I'd personally think in such circumstances, cash will be also a) less important because there is nothing to spend it on b) increase the risk of looting or theft from those that have the cash.

However, it is very easy to stand up temporary cell towers and distribute low-end smartphones and solar chargers.

This is no different to saying:

The time for Democracy/Nuclear Disarmament/Legal System is long past because we still have social problems, nuclear weapons and crime.

It is so ill conceived and not properly thought true that doesn’t deserve to be debated.

Of course, there is a problem with counterfeit cash, but the scale of the problem is magnified when dealing with electronic cash as the only means of payment, which is presumably controlled, censored and tracked by Governments.

Yet, you never answered the question – how do we tackle tax evasion today and is it a bigger problem that tax is evaded in cash or offshore locations?

Where is it a bigger problem – in developed economies or in emerging markets?

I would recommend this reading on the use of cash in disaster relief efforts:

http://www.cashessentials.org/news/news-details/2016/11/08/cash-is-critical-to-disaster-response

In summary – I am not necessarily against the reduction of cash, which comes naturally as market forces drive its reduction, but against Government intervention in that direction. I also do not buy a single bit the argument that all tax evasion and crime would be eradicated. It would be just a different type of crime, committed by different people, and sadly, on a much larger scale. As technology enables efficiency for its users, it also enables efficiency in crime.

It is clear that anomynous digital currencies do not have the physical limitations of cash to be used for criminal activities and which is also an important reason for their popularity. Having said this, that does not mean that cash is 'innocent' with respect to enabling crimininal activities. There is one key advantage of cash. You can lit your fire with it if you need to hide in a cold shelter (for the ones who have seen Narcos).

The currently unraveling $1.8B fraud at India's Punjab National Bank happened entirely via SWIFT, the mother of all electronic payment methods.

@Ketharaman how much is lost each year to criminal activity associated with cash? Black market tax evasion, counterfeit notes, etc. etc. The situation at Punjab National Bank you mentioned is no different to giving someone your debit card and password and then complaining when they clear out your account, or giving them your wallet full if $100 bills, it's not a fundamental problem with the concept of electronic payments

Also, and maybe slightly O/T but I'd disagree that SWIFT is a payment method, it's simply a messaging network that facilitates access to many different payment networks...by itself it offers no clearing or settlement capability.

@DavidGodfrey: I don't know the exact figures but I can bet that the amount lost to criminal activity associated with electronic payments is 10X more than that associated with cash. If SWIFT is not an MOP, neither is cash - as someone who lived in India in November 2016, I only know too well how suddenly sovereign guarantees can be revoked. Besides, the point is moot: The PNB scam involved no cash and that's the real point - fraud can happen with any way you pay and not just when you pay with cash.

To paraphrase Kenneth Rogoff (a former chief economist of the International Monetary Fund) don't we need to encourage a "less-cash" society, not necessarily a cashless one?

If Rogoff's calculations for cash-based tax evasion are correct (e.g. 3% GDP leakage in the US), the economic penalty globally for continuing to promote cash may be a touch higher than the amount lost due to criminal abuse of electronic payments. But then again, I don't know the exact figures.

To paraphrase Al Capone (a former Mafia Don), you can get a lot more done with cash and cashless than with cashless alone. 

Since I'm a payments tech professional, I have a vested interest in the growth of cashless / lesscash. However, IMO, silly, reality-defying and headline-bait posts like this are the enemy in the drive to achieve that outcome. I've shared some alternatives in How To Really Kill Cash.