Why Governments Seek to Eliminate Cash
Why Governments Seek to Eliminate Cash
By Adam Hayes Updated March 23, 2023
Reviewed by Erika Rasure Fact Checked By Suzanne Kvilhaug
Why Eliminate Cash?
Cash can play a role in criminal activities such as money laundering and allow for tax evasion. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking. Transactions using digital money reduce costs and create transparency in an individual's spending and savings habits.
KEY TAKEAWAYS
Cash can play a role in criminal activities such as money laundering and allow for tax evasion.
Using digital money prevents the transfer of physical money and all transactions are handled by computers and the internet.
In the United States, any financial institution that receives a cash deposit of more than $10,000 must report it to the IRS, making tracking and tracing illegal activity easier.
The Federal Reserve has been exploring the use of a Central Bank Digital Currency (CBDC).
The "War on Cash"
In 2016, the European Central Bank (ECB) eliminated minting €500 notes to curb fraud and money laundering. The note was the second-largest denomination across the euro currency zone, and the ECB claimed that it was the banknote of choice among criminals. At the time of the ECB's announcement, 500 euro bills in circulation represented one-third of all the euro-denominated cash outstanding.
Since 2016, global policies have been implemented to thwart the use of cash in favor of digital currency transactions. In the United States, any financial institution that receives a cash deposit of more than $10,000 must report it to the IRS, making tracing illegal activity easier.
Promoting and tracking digital transactions amounts to a war on cash. The use of digital money avoids the use of cash as transactions are handled by computers and the internet. Critics argue that limiting the use of cash and forcing individuals to pay through banks or credit card companies compromise financial privacy, prevent interest accumulation on saved cash, and limit profits of small business owners who often rely on cash sales.
Limiting Cash Savings
To continue reading, please go to the original article here: