The largest bank in Norway has called for the country to stop using cash, the Local reported Friday. This comes as the latest move in a country that has been leading the global charge toward electronic money in recent years, with several banks already not offering cash in their branch offices and some industries seeking to cut back on paper currency.
DNB, the bank with the proposal, has said eliminating the use of cash would cut down on black market sales and crimes such as money laundering.
“There are so many dangers and disadvantages associated with cash, we have concluded that it should be phased out,” he added.
The country has already moved in this direction naturally. Bentestuen estimated that about 6 percent of Norwegians use cash on a daily basis, with the numbers higher among elderly people.
DENMARK is on track to become the world’s first cashless nation, with its government pushing to free some stores, restaurants and petrol stations from accepting cash payments.
The proposal to scrap cash transactions is part of a package of cost-saving measures being introduced ahead of the Danish election in September, the Independent reports.
It is understood the government is hoping to get rid of the option to pay by cash by as early as 2016.
Nearly a third of all Danish citizen prefer to use Danske Bank’s official app,MobilePay, to pay for services and transactions, and it is expected that the proposal will be met with little opposition.
Financial experts from the Bank of Finland suggested that banknotes could be phased out by 2030. Technological advancements surrounding mobile payments and the need for convenient banking services are largely responsible for this feasible prediction.
Kari Takala, senior advisor at the Bank of Finland’s Currency Department, said, “Many see cash as a backup system. It’s quick and convenient to use. In the future we’ll have to see how quickly mobile payment methods replace cash.”
The spread of global cash bans continues with Greece unveiling their so-called ‘soft’ approach by which taxpayers will only be granted tax-allowances or deductions when payments are made via credit or debit cards. AsKeepTalkingGreeece reports, the new guidelines refer to employees, pensioners, farmers, and also the unemployed.
Amid scenes of panic across India, following PM Modi’s shock decision to withdraw high-value bills in the middle of the sowing and wedding season, Reuters reports the move, aimed at cracking down on the shadow economy, has brought India’s cash economy to a virtual standstill. With over 90% of all transactions done in cash, money flows in and out of the black-and-white system… until now, as Devangshu Datta exclaims, “The system works because everybody believes that those pieces of paper will be accepted by everybody else… This move has shaken that trust.”
Farmers have been left stranded as traders have no cash to pay for their produce, while millions of Indians lined up outside banks and post offices for the ninth day to exchange old banknotes or withdraw rationed money from their accounts.
Venezuela is taking nearly half the country’s bank notes out of circulation beginning Wednesday, threatening to ruin the holidays season for Venezuelans already suffering from dire cash shortages, hyperinflation and an economic meltdown.
The country’s largest bill, worth 100 bolivars or just 3 U.S. cents on the black market, is to become illegal, in a move designed to combat contraband along Venezuela’s borders, the government said.
President Nicolás Maduro said outlawing the notes would destroy what he claims are Colombian smuggling mafias that hoard bolivars to buy price-controlled food and gasoline in Venezuela, which is then resold at a markup. Mr. Maduro said Monday night he was closing the Colombian border until Thursday night to prevent stacks of bolivars from making it back to the country.
It was just two days ago that Bloomberg implored officials to “bring on a cashless future” in an Op-Ed that calls notes and coins “dirty, dangerous, unwieldy, and expensive.”
You probably never thought of your cash that way, but increasingly, authorities and the powers that be seem determined to lay the groundwork for the abolition of what Bloomberg calls “antiquated” physical money.
We’ve documented the cash ban calls on a number of occasions including, most recently, those that emanatedfrom DNB, Norway’s largest bank where executive Trond Bentestuen said that although “there is approximately 50 billion kroner in circulation, the Norges Bank can only account for 40 percent of its use.”
That, Bentestuen figures, “means that 60 percent of money usage is outside of any control.” “We believe,” he continues, “that is due to under-the-table money and laundering.”
DNB goes on to say that after identifying “many dangers and disadvantages” associated with cash, the bank has “concluded that it should be phased out.”
Uruguay yesterday sanctioned its Financial Inclusion Law, which will ban cash payments worth more than US$5,000 as of May 1 next year. Property transactions and car purchases will thus have to be made through banking mechanisms.
The measure will affect thousands of Argentines who have snapped up properties across the River Plate, primarily in the summer-favourite destination of Punta del Este.
According to Uruguayan daily El País, if a property is bought with funds located in another country, deeds will have to include details on how the transaction was made, including account numbers and the names of the buyer and the bank where the funds came from.
The recipients of income from rent contracts already in place before May 1 of 2015 will have to declare a bank account to which the funds should be deposited.
Management firms,’ lawyers’ and notaries’ fees as well as the commissions of real estate agencies will also have to be made electronically should they exceed the US$5,000 limit.
In addition, all taxes will have to be paid electronically, regardless of the sum that is owed.
There is no way back for Argentinian people to trust their own currency. Several governments have used the “Peso/Dollar” exchange to dig into people’s savings, reward their friends and limit the freedom of citizens to use other currencies.
Short of Dollarizing the economy again, the only solution for the country is going cashless. People are desperate, and they’re looking for alternatives such as mobile payments, Amazon gift cards and Bitcoin to store their savings away from government control. A digital currency could help curb black market exchanges, fight corruption and restore the country’s image.
Australia looks set to follow in the footsteps of Venezuela and India by abolishing the country’s highest-denomination banknote in a bid to crack down on the “black economy”.
Speaking to ABC radio on Wednesday, Revenue and Financial Services Minister Kelly O’Dwyer flagged a review of the $100 note and cash payments over certain limits as the government looks to recoup billions in unpaid tax.
Monday’s midyear budget update will include the appointment of former KPMG global chairman Michael Andrew to oversee a black economy taskforce. The black economy accounts for 1.5 per cent of GDP, given many cash payments are untaxed.
Ms O’Dwyer told the ABC not only is the lost revenue owed to the Australian people for schools and hospitals, but it’s also critical for those who do the right thing and pay tax.
“The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” she said. Despite the broad use of electronic forms of payment, Ms O’Dwyer warned there are three times as many $100 notes in circulation than $5 notes.
Several of Saturday morning’s newspapers report that the legal limit for payments in cash is to be reduced from 15,000 to 5,000 Euro. The new measures are intended to help in the battle against money laundering. The Federal Secretary of State responsible for tackling fraud John Crombez (Flemish socialist) told journalists that “There is evidence that payment by bank transfer reduces the risk of fraud”.
Within the next few years, the maximum limit for cash payments will be further reduced. Mr Crombez hopes that by the end of the current legislature the limit will stand at 3,000 Euro.
The government is to adopt a phased approach to reducing the limit, as it wants to ensure that it will be respected.
“As far as I’m concerned, if we are successful in ensuring the limit is respected, it can be reduced still further in the future, as has been the case in some other countries.”
By 2030, cash purchases will make up only 10 per cent of money spent in Canada, according to a prediction by Moneris Solutions Corporation (“Moneris”), Canada’s leading credit and debit card processor. Compared to 35 per cent of overall transactions in 20141, the 70 per cent decline will coincide with an increase in the use of digital payment technologies, especially among younger Canadians. Consumer misconceptions about (1) the security of mobile wallets and (2) the ability of mobile wallets to digitally store physical wallet contents (including plastic loyalty cards and receipts), are among the factors slowing the transition.
Although China still has some way to go before it catches up with countries such as the US and Sweden, the speed at which China has made the shift from cash towards cashless has surprised many. Non-cash payments have been growing by around 40 per cent a year and last year China moved into 4th place in the world for non-cash payments after the US, Europe and Brazil.
There are many reasons for China’s rapid transition away from cash. One is urbanisation, as non-cash payments are becoming both easy and popular. This is especially the case in top-tier cities such as Shanghai, Shenzhen and Beijing where it is both trendy and convenient to pay without using cash.
There is a huge variety of choices when it comes to making cashless payments and China UnionPay has definitely helped to encourage this, particularly in the case of debit cards, which outnumber credit cards in China by 10 to one. China has more than 4 billion cards on issue – almost enough for each adult to have about three each.
Mobile payments have also taken off in China – it has the largest proportion of people in the world using their mobile phones to make payments, online and physically.
The Chinese government is also pushing China towards a cashless society. As in Thailand the authorities are keen to encourage the use of non-cash payments as it will reduce the cost of printing, circulating and handling banknotes, and help in the battle against tax evasion and corruption, as well as other illegal activities.
In order to accelerate the use of non-cash payments, the Chinese government has increased the availability of point-of-sale machines and opened up the domestic card-payments market to competition. Competition is intense, as pre-paid cards and electronic wallets such as Wechat, Mi Wallet and Alipay have become extremely popular, especially with young people. I have been using one of these electronic wallets to pay for my shopping at the bakery and convenience store for a few months now.
In 2000, Ecuador moved to ditch its stumbling currency for the U.S. dollar. Now more than 15 years later, the South American country is revamping its monetary system again—using digital currencies.
Ecuador’s Sistema de Dinero Electrónico (electronic money system) kicked off in December by allowing qualifying users to set up accounts, and it will begin acting as a real means of transaction this month.
Once the government flips the switch, the South American nation of 16 million will host the first-ever state-run electronic payment system. (Other countries, such as Sweden, use digital currencies widely, but they’re not state-sponsored.) But the Ecuadorean government says the scheme is designed to support its dollar-based monetary system, not replace it.
France becomes the latest as Prime Minister Jean-Marc Ayrault plans to erect new controls on cash transactions in order to tighten up tax collection and meet the country’s optimistic budget deficit target of 3% of GDP. The government needs euros and they need some fast.
In the government plan labeled “Fight against fraud,” France’s fiscal residents would see the cash transaction limit decrease from €3,000 to €1,000 per purchase. However, in a nod to the exiled wealthy and what Wolf Richter calls the “Depardieu exception,” those fiscal residents of a country other than France would have their cash transaction limits reduced from €15,000 to €10,000 per purchase. Legislative measures could be finalized by the end of 2013.
Hong Kong was one of the first places in the world with a cashless payment system when it introduced the Octopus card in 1997, but since then e-payment options have mushroomed globally. And despite the city granting 13 licences for stored-value e-payment services, uptake has been slow.
Hong Kong prides itself on being up to date with the latest technology, and the government likes to call it a “smart city”, but to really embrace that concept, many believe Hongkongers must abandon the idea that cash is king and join the global trend towards electronic payments.
Take Larry Salibra, a tech-savvy shopper, for example. He is frustrated that he is forced to carry cash whenever he is commuting around Hong Kong, even though at least a dozen e-payment options are available.
Now, in what should be a wake up call to the world, Bank of Ireland has banned branch withdrawals of less than €700.
Here’s The Irish Times explaining that tellers will still assist the “elderly” if they have trouble using automated methods of obtaining cash:
Under new rules, designed to streamline in-branch services, Bank of Ireland said withdrawals of less than €700 will no longer be facilitated with the assistance of tellers.
From mid-November, customers will have to use ATMs or mobile devices for small and modest-sized withdrawals.
Lodgements of up to €3,000 and those involving less than 15 cheques will also have to use the bank’s dedicated lodgement ATMs.
“Bank of Ireland understands these changes may be a new way of banking for some of our customers, and the branch teams will be available to help and guide them through this change,” the bank said in a statement.
So, if you are, i) wanting less than €700, ii) have less than 15 checks to deposit, or iii) aren’t looking to put at least €3,000 into your account, you are no longer welcome inside Bank of Ireland branches.
A special committee headed by Prime Minister Benjamin Netanyahu’s chief of staff, Harel Locker, has recommended a three-phase plan to all but do away with cash transactions in Israel.
The motivation for examining a cash-less economy is combatting money laundering and other tax-evasion tactics, thereby maximizing potential tax collection and greatly expanding the tax base. This is important considering the enormous strain put on Israel’s national budget by the army, healthcare system and other public services.
The committee estimated that the black market represents over 20 percent of Israel’s GDP, and cash is the facilitating factor. Cash enables tax evasion, money laundering and even financing terrorism.
Outgoing Mexican President Felipe Calderon has signed into law a ban on large cash transactions. The ban will take effect in about 90 days and it is part of a broader effort to control monetary flows within the country.
Under the law, a Specialized Unit in Financial Analysis operating within the Attorney General’s Office will be created to investigate financial operations “that are related to resources of unknown origin.”
For real estate transactions, cash payments of more than a half million pesos ($38,750) will be forbidden and, for automobiles or items like jewelry, art, and lottery tickets, cash payments of more than 200,000 pesos ($15,500) will be forbidden. The law carries a minimum penalty of five years in prison.
In 2010, Mexico instituted strict limits on foreign exchange cash transactions to $1,500 per person per month, which caused several cash dollar exchanges to withdraw from the business and had the effect of penalizing tourists.
The government is working on a decree law that includes a series of means of fighting against fraud, among which include limiting cash payment of 1,000 euros instead of the current 2,500 . The intention of the Executive is to approve this measure in the Council of Ministers next Friday, although the Ministry of Finance says that this point is not yet closed and could be delayed somewhat more in time, and with it is intended to deter and curb fraud Which are discussed through VAT as well as the submerged economy.
Andy Haldane has proposed that Britain should abandon our centuries-old system and opt for a government-backed digital currency.
The Bank of England’s radical thinker argues such a move would give the bank new flexibility in the event of another economic downturn.
Mr Haldane said negative interests could be necessary to protect the UK economy and would help the Bank of England fight off the next recession.
He added that a switch to digital would help the bank to manage inflation by enabling it to bypass the current constraint against lowering rates below zero.
Roughly two weeks ago, when writing about the cash ban in India, I stated:
If you think the Elites aren’t watching this unfold with sheer delight you’re mistaken. Globally a war on cash has been declared. And India has now proved that it can be done with little consequence. The fact it INCREASE tax hauls (something every Government on the planet wants) is just icing on the cake.
Fast forward to this week at the Davos Economic Forum in Davos Switzerland, and Nobel Prize winning economist Joseph Stiglitz all but said the exact same thing.
Indian Prime Minister Narendra Modi has already removed 86% of his country’s currency from circulation in an attempt to curb tax evasion, tackle corruption and shut down the shadow economy.
Should the US follow suit?
Joseph Stiglitz, Nobel Prize-winning economist, thinks so. Phasing out currency and moving towards a digital economy would, over the long term, have “benefits that outweigh the cost,” the Columbia University professor said on day one of the World Economic Forum’s Annual Meeting in Davos…
“I believe very strongly that countries like the United States could and should move to a digital currency,” he said, “so that you would have the ability to trace this kind of corruption. There are important issues of privacy, cyber-security, but it would certainly have big advantages.”