The term 'Cashless Society' is included in the Banking edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Choose your edition here...
A Cashless Society refers to an economic environment where money is not used in physical coins and notes any longer to carry out financial transactions of any kind. In its place, a digital information transfer, represented by electronic forms of money such as that in bank account, moves back and forth between the parties of the transaction. In the distant past, such cashless societies have functioned successfully. They began as barter and exchange economies. Today, it is thanks to digital currencies like Bitcoin and Ether that they are once again being seriously considered. Ultimately, the goal of this electronic ultra-modern form of the Cashless Society is to utilize only electronic record keeping and transactions.
The reason the idea is constantly debated anymore is thanks to the fact that digital means for managing, recording, and exchanging money in investments, commerce, and everyday life already exist and are rapidly gaining traction in most nations on most continents of the world today. Cash-based transactions across borders were historically very limited yet thanks to electronic records and transfers they are now imminently possible. There are even nations that have erected limits to the quantities of transactions that can take place in cash and via non-electronic means of payments.
It was only as recently as the 1990s that this trend accelerated towards a Cashless Society and settlement electronically. This arose as the new fad of electronic banking became mainstream and commonplace. By the year 2010, such digital means of payment had evolved to widespread use in a huge number of countries around the world. Paypal and digital wallet networks run by the likes of technology giant Apple, along with smartphone and electronic card payments, became widespread alongside readily accepted and commonly utilized e-banking and electronic bill payment.
This trend was only encouraged by the passage of Congressional regulation that frowned on and looked with suspicion at larger cash transactions which occur using bank notes. Ostensibly, the argument behind this was to cut down on terrorism funding and financing as well as organized crime’s international money laundering. This reached the point after 2015 where the phrase the “war on cash” became a popular saying in the mainstream vernacular. As of 2016 in the United Kingdom, as many as one out of every seven individuals no longer utilize or even carry any cash. The figures are far higher in Scandinavian countries like Denmark, Norway, and Sweden.
Many of the critics of the war on cash argue that the real intentions behind it are to subject people who save money to negative interest rates, create a universal banking transactions tax, or possibly even a global tax on financial transactions. Control of all transactions, the utilization of money, and interest moves into the hands of the central banks and regulatory authorities as the individual use of cash is successfully eliminated in a Cashless Society.
In other words, by forcing corporations and individuals alike to change their paper currency into only electronic bank deposits, the authorities may more easily coerce them into spending the funds instead of saving them. They will encourage this by charging high costs for carrying balances in the electronic only bank accounts. Naturally this would ultimately boost consumption, inflation, and gross domestic product so that the debt laden governments would have a greater ability to pay down these unprecedented debt levels they have run up over the past twenty years.
Interestingly enough, this is not the first such war on cash which the United States propagated. In the 1930s, the United States federal government enacted this policy by making it illegal for citizens to own gold bullion. This prevented them from hoarding it. Since the cash was based on the gold standard at the time, this was a necessary step to discourage saving and encourage spending as a means of escaping from the ongoing ravages of the global Great Depression. Since the world operates on a paper standard today, the same goal is carried out by restricting the use and keeping of paper currency.