Are we near to the end of cash?
Analysis about the potential end of cash
Are we near the end of cash payments?
Cash has been our way of life for centuries. At the beginning its value was linked to gold. Later, the countries realized that starting the machine was a great alternative. As a consequence of this situation, the economists started talking about inflation. When a country starts to produce money over the real demand of the population and there’s more money on the streets, the economists use to say that there is more supply than demand (in terms of money) and the value of the money is drastically reduced.
Countries like Argentina, Venezuela and many others are continuously in crisis and the population extremely stressed as a consequence of the embarrassing attitude of their governments that from time to time, declare the country in bankruptcy.
Money has been, too, the preferred method of payment for criminals, drug dealers and an easy way to evade taxes to tax evaders.
Mr. Bush was the first president who realized the importance of having under control the traceability of the money. If he could follow the money, he could follow the terrorists. The end of the off-shore world was caused by the terrific terrorist attack to the twin towers in New York.
In practical words, what happened?. The United States and its currency is the reference currency for many transactions. Basically, they decided to oblige the rest of the world to report all the US citizens with money custodied out of its territory. The consequence of breaching this law (called FATCA) was a withholding of 30% of revenue coming from the US. As you can suppose all the banks and Governments complied.
OECD was following how the FATCA Act worked and they decided together with the G20 countries to put in place an international alternative, similar to FATCA called CRS (Common Reporting Standard).
The off-shore world disappeared so quickly that many people did not have time to react.
The only political measure to finish this work outstanding was the cash. Many countries have taken the decision to limit payments in cash. Spain nowadays limits the payments in cash up to 1.000 in consumer to business transactions.
The new technologies, Blockchain and the Cryptocurrencies are surpassing the cash. For the Anti-Money laundering authorities and the Tax Agencies this is fantastic news since it will decrease the level of tax fraud significantly.
And, I am sure that the end of cash is going to happen very quickly.