War on Cash Is in Full Force in These Countries
Truth be told, the war on cash has begun. Don’t be shocked if it comes to North America sooner than many anticipate.
Not too long ago, India made headlines around the globe. The Indian government, all of a sudden, banned some of the most-used currency notes in the country, all in the name of cracking down on corruption. This created havoc in the country, with long lines at ATMs, and leaving many strapped for cash.
You see, in the Indian economy, cash is commonly held by households to pay for groceries and bills. What do you do when the cash you had isn’t acceptable anymore, and you are ultimately forced to deposit money in a bank and can only get a rationed amount back for now?
This is a war on cash. But don’t be so naïve to think that India is the only country in the midst of a war on cash.
My colleague, Alessandro Bruno, BA, MA, wrote about the war on cash that’s going on in Europe here: “Here’s How the War on Cash Threatens You.” He talked about how the Spanish government plans to issue a law that will limit cash transactions to no more than €1,000.
In Venezuela, a war on cash is in full effect as well.
Around mid-December, President Nicolás Maduro announced that 100-bolivar bills, the most commonly used notes in the country, would become illegal and useless. This was done in the name of punishing currency speculators in Colombia and Brazil, who were supposedly behind the bolivar’s decline. Banks in Venezuela only allow people to take out the equivalent of $4.00 per day. (Source: “The latest hardship in Venezuela: a shortage of cash,” Los Angeles Times, December 22, 2016.)
In other words, if you had cash on hand, it’s useless now and, if you had money in a bank account, good luck taking it out.
The Big Question: Could the War on Cash Happen in North America?
Don’t rule out a war on cash in North America just yet.
Mind you, if you are thinking the war on cash in North America will be like it happened in India, you may be truly mistaken. It’s going to be a slow process. It could be in phases, in which the larger denomination bills are phased out first, and then eventually smaller denomination bills will follow. As a matter of fact, this idea is gaining strength these days.
Not too long ago, former U.S. Treasury Secretary Larry Summers pitched the idea of “It’s time to kill the $100 bill.” (Source: “It’s time to kill the $100 bill,” The Washington Post, February 16, 2016.)
We also see that well-known economists at major banks and universities have supported this idea.
Dear reader: with time, we will know more, but don’t be shocked if a war on cash becomes a reality in North America sooner rather than later.