For some years now, cash has been on the retreat. Against the backdrop of globally changing payment behaviour, the debate about the abolition of paper money is gaining more and more importance. While large banknotes are to disappear, coins and small notes will be retained in the long term.
What functions does cash fulfil? How have means of payment changed over time? What arguments are there for and against the abolition of paper money and what exactly should the implementation look like?
Vera Dembski gives a comprehensive overview of the positions in the current discussion and discusses their plausibility. She also presents possible consequences of abolishing cash and argues for strict data protection and security requirements for electronic means of payment.
From the contents:
- ECB;
- Banknotes;
- Coinage;
- Undeclared work;
- Illegal transactions
Table of Contents
1 Introduction
2 Cash abolition at a glance
2.1 Conceptual basics
2.2 Functions of cash
2.3 Means of payment in transition
3 Arguments
3.1 Gaining central bank control
3.2 Curbing illegal transactions
3.3 Issuance of cash and its costs
3.4 Cash as protection against unwanted data collection
3.5 Further argumentation
4 Conclusion
Objectives & Topics
The primary objective of this work is to provide a comprehensive, scientific analysis of the current debate surrounding the potential abolition of cash. It examines the various arguments from both proponents and critics, explores the socioeconomic implications of a transition to purely electronic payment systems, and discusses the challenges that such a fundamental change would pose for modern societies and their legal frameworks.
- The impact of cash abolition on central bank monetary policy.
- Arguments regarding the reduction of illegal transactions and shadow economy activities.
- Economic analysis of cash versus electronic payment transaction costs.
- Privacy concerns and the threat of state and corporate data collection.
- Psychological aspects and the role of cash in financial autonomy.
Excerpt from the Book
3.4 Cash as protection against unwanted data collection
This section refers to the violation of informational self-determination through the abolition of cash. Money embodies freedom of choice for its owner. Already in the 19th century, Fyodor Mikhailovich Dostoyevsky had revealed: "Money is shaped freedom (Dostoevsky, 2012, P. 23)". In the present sense, this applies exclusively to cash. All alternative forms of money are subject to potential surveillance.
Even with traditional payment methods such as bank transfers, direct debits, etc., usage data is generated from which conclusions can be drawn about the behavior of the payer. The abolition of cash entails the risk that transfers of purchasing power will only be possible via traceable bank details and the accounts held there. Through his use, the actor has the opportunity to remain anonymous, to retain control over his own data and to avoid surveillance. The cash means of payment does not provide any information about the identity of a buyer (cf. Hennies, 2016, p. 3).
Banknotes are provided with a serial number, which can be read. Based on this number, it is possible to assign payment transactions to a specific person. In reality, this procedure is not applicable, since cash changes hands too often without linking the identity of the user to this number (see Sorge, 2015, p. 520).
In connection with the use of electronic payment transactions, considerable amounts of data are required. These are usually personal data, such as individual information about personal or factual circumstances of an identifiable natural person. The concrete determinability of a person is already given if the identity can be determined by adding further information (cf. BDSG §3). According to Noack and Philliper (2016, p. 15), not only the collection of payment transactions is questionable, but also the collection of personal data in connection with payment transactions.
Summary of Chapters
1 Introduction: Provides an overview of current trends toward limiting cash and outlines the research objective of analyzing the associated arguments.
2 Cash abolition at a glance: Defines key terms, examines the functions of cash in modern economies, and traces the historical development of payment methods.
3 Arguments: Presents a detailed juxtaposition of the arguments for and against cash abolition, including central bank control, illegal activity, costs, data protection, and psychological factors.
4 Conclusion: Synthesizes the discussed arguments and highlights that an objective consensus is currently unreachable, emphasizing the need for regulated frameworks for future payment systems.
Keywords
Abolition of cash, Central Bank, Monetary policy, Eurozone, Shadow economy, Tax evasion, Corruption, Terrorism, Cybercrime, Digital payments, Data protection, Privacy, Informational self-determination, Payment systems, Financial autonomy.
Frequently Asked Questions
What is the core focus of this publication?
The work focuses on the multifaceted debate regarding the potential abolition of cash in western industrial nations, examining both the motivations for and the consequences of moving toward a purely cashless society.
What are the primary thematic areas covered?
The text explores monetary policy challenges (such as the zero interest rate limit), the fight against criminal activities, the cost-efficiency of payment methods, and the critical issue of personal data protection.
What is the central research question?
The research aims to determine the consequences of abolishing cash and whether the purported benefits of increased control and efficiency justify the potential loss of civil liberties and individual financial autonomy.
Which scientific methodology is applied?
The author employs a systematic literature analysis, drawing on economic theories, empirical studies, and legal documents to discuss the arguments and provide a panoramic view of the debate.
What is the focus of the main body of the text?
The main part provides a structured analysis of five specific argument complexes, including central bank control, illegal transactions, costs, data collection, and broader sociological or medical implications of cash usage.
Which keywords characterize this work?
Key concepts include cash abolition, central bank control, informational self-determination, shadow economy, cybercrime, and the trade-off between privacy and state monitoring.
How does the zero interest rate limit relate to the abolition of cash?
The text argues that the existence of cash prevents central banks from implementing deeply negative interest rates, as savers can simply hoard physical cash to avoid negative charges.
What are the main concerns regarding the loss of anonymity?
The author highlights the fear that a cashless society would lead to a "transparent citizen," where movement and consumption profiles can be used by both commercial entities and dictatorial regimes to monitor and control individuals.
- Citar trabajo
- Vera Dembski (Autor), 2020, Consequences of the abolition of cash. Arguments for and against cashless means of payment, Múnich, GRIN Verlag, https://www.grin.com/document/1187329
