The world has experienced various means of exchange. We have transited from coins, to paper currency, and finally to digital currency. An economist acknowledges the adoption of a cashless economy as a regime associated with numerous payoffs such as a reduction in money laundering, and tax evasion. However, the critics see risks and threats of privacy, frightening new powers for government. Nevertheless, the central banks have the fear of losing control over the supply of money to digital networks such as Facebook.
Initially, in 2018, the introduction of debit cards affected the use of cash. And now, the spread of the COVID-19 made some merchants in Seattle stop accepting cash, saying that it can aid the spread. Although, some shops in U.S cities frowned at the cashless policy, and declared it illegal to prevent discrimination. The fear now is that the associated with the virus could result in a shift to more digital payments. However, the financial crisis of 2008/2009 led to an increase in the volume of cash in circulation, alongside the number of digital payments. Despite the rise in digital wallets such as Paytm, a lot of people in India still use cash as a major means of exchange.
The fact is that eliminating cash will stop expenses associated with cash distribution and would make it easier to curb tax evasion and drug trafficking. Stores can reduce theft and promote business performance. According to economists, it would become easy for central banks to effectively fight recession as they would be able to impose negative interest. Critics, on the other hand, have argued that digitalizing cash would give the governments and banks complete control of one’s financial activities. Phone network may fail or vulnerable to cyberattack. However, the poor will lose in both ways. When Facebook attempted to create a global digital currency called Libra, the idea received opposition from politicians who claimed that it would be associated with issues such as data protection, national sovereignty, and money laundering.
Many people in the world rely on cash to acquire small quantity goods, and everyone can’t afford smartphones or other devices to use the digital cash network.