Miser’s beware –The coming of a cashless society –

The first known civilization to use currency was the Mesopotamian civilization, nearly 5,000 years ago. The Mesopotamian shekel is considered the earliest form of currency. The first mints appeared around 650 to 600 B.C. in Asia Minor, where the elites of Lydia and Ionia used stamped silver and gold coins to pay their armies. This innovation marked a significant development in the history of trade and economics, facilitating transactions and standardizing the measure of value for goods and services.

As a young economics student, I was taught money was both a vehicle to promote trade and a source of value. Money was identified as a major economic variable in its own right and the quantity theory of money was identified as the root cause of inflation (What Is the Quantity Theory of Money: Definition and Formula (investopedia.com)

It still is but the composition of money has changed considerably. First cheques and then credit cards and electronic money transfer became the major ways of circulating money. We may be the first generation since 650 BC not to use cash. Coins are disappearing in use because they are a nuisance to carry and store and because, as small denominations have been rendered almost valueless by inflation. as a means of purchase. Currency notes face a similar problem but as periods of -inflation has shown notes can be printed and easily increased in denomination. Most importantly, there are now much more convenient ways to hold and transfer wealth

Credit Cards, and electronic transmission of funds

The first credit cards were store based cards, allowing the owner to purchase goods and services within a defined location (s) In the late 1940’s these morphed into credit cards of which the Diners club card is the best known. (History of Credit Cards: When Were Credit Cards Invented? – Forbes Advisor) There introduction was accompanied by widespread distrust about their use and the presence of a number of safeguards and hurdles regarding their availability but by 1970’s the introduction of bankcard in Australia saw the rapid increase in the use of credit. Electronic transfer of finds began in the US by 1978 (Electronic Fund Transfer Act – Wikipedia). accelerated the retreat from cash.

Cashless rates around the world

Sweden and Denmark are leading the way with only 6% of transactions in cash. Only 1% of Swedish GDP is traded in cash compared to the European average of 10%. In Sweden shop keepers can legally refuse to accept cash (Why Sweden’s cashless society is no longer a utopia | World Economic Forum (weforum.org)

.In terms of other comparable countries, the percentage use of cash is

• Australia 14%
• South Korea 14%
• USA 32%
• Japan, Spain, and France (40%)
• Italy 70% with a value of cash on GDP of 4%.(Italy is still cash-dependent |The European House – Ambrosetti)

The Commonwealth Bank predicts Australia will become cashless by 2026

The Dangers of a Cashless Society

There are potential risks associated with a cashless society. These include

Privacy Concerns:  Digital transactions leave a digital footprint, allows companies and governments to track spending habits and personal information. This data can be used for targeted advertising, influencing consumer behaviour and, in more extreme cases, surveillance.

Cybersecurity Risks: As society becomes more dependent on digital transactions, the risk of cyberattacks increases. Financial institutions and individual users become targets for hackers seeking to exploit vulnerabilities for financial gain.

Economic Exclusion: A cashless society could exacerbate economic inequality by excluding those without access to digital banking, such as the unbanked or underbanked populations. These groups often include low-income individuals, the elderly, and those living in rural areas without reliable internet access. Without cash, these individuals may find it challenging to participate fully in the economy.

Technical Failures: Reliance on technology means that technical failures can have widespread consequences. System outages, software glitches, or hardware malfunctions can prevent access to funds, disrupt commerce, and cause economic instability.

Loss of Tangible Value: Cash has a psychological aspect of tangible value that digital currency lacks. The physical act of handing over cash can make consumers more mindful of their spending.

Monopoly and Control: a cashless society could lead to a concentration of power among a few large financial institutions and tech companies. This monopoly could limit competition, reduce consumer choice, and give these entities significant control over the financial system.

Conclusion:  Creeping Cashlessness, no approval sought from the population

It appears that Australia is heading for a cash-less society without any explicit agreement from the population. Governments what it to track income, reduce tax avoidance and cease the costly business of minting money. Banks and financial institution want it to ease the cost of their operations and to increase the dependence of the population on their services. Store owners want it to reduce the need to handle currency and their inability to find staff that can do the necessary arithmetic to give proper change.

There are considerable dangers in this rush to enforce a cashless economy on the Australian people  Privacy concerns, cybersecurity risks, economic exclusion, technical failures, loss of tangible value, and the risk of monopoly are all factors that need to be addressed and safeguards before allowing big business and Governments to enforce these changes on the population these issues put in place.