Drumbeats for the cashless society

[pmbug]

...
New York City may soon force cashless restaurants and retailers to accept cash. Councilmember Ritchie Torres has proposed a bill that would forbid businesses from accepting only credit and debit cards. Torres is also calling for the Consumer Affairs Department to issue violations to merchants who do not accept cash.
...
Torres says the bill is now waiting to be heard by the Consumer Affairs Committee. He’s hoping to take up a vote and get it passed sometime in the coming year.

“Paper money is the universal currency,” said Torres. “I find it wrong that a business could reject legal tender that has the full faith and credit of the United States government. It should be accepted as a legitimate mode of payment at every business in New York City.”

https://pix11.com/2018/11/29/lawmakers-consider-ban-on-cashless-businesses-in-nyc/

 

[pmbug]

And now a view from around the globe:

Journalist Sthembiso Sithole chats to Riaan Graham sales director for Ruckus Networks in sub-Saharan Africa, about the state of cashless societies in Africa.

Sthembiso Sithole (SS): What is the current state of cashless societies in Africa?

Riaan Graham (RG): Africa’s quest for a cashless society is gaining momentum. Its lack of financial inclusion and the geographic distribution of the population has forced the continent to look at innovative solutions to banking and financial literacy. Mobile banking has also had a revolutionary impact on society - allowing people, even in rural areas, to transact money to one another, make purchases and even pay for key services like electricity and water. This cashless community is growing throughout Africa - with countries like Kenya and Rwanda spearheading the curve. While the table is set for South Africa to do the same, the uptake has been slower.
...

More: https://www.msn.com/en-za/news/othe...est-for-a-cashless-society-growing/ar-BBQhE6r

Terrible propaganda piece telling dumb citizens not to keep a stash of cash at home:

A recent survey found that one in ten Brits admits to hiding cash under their bed.

Despite the global movement to a more cashless society, technical glitches at banks and Visa may have made even more people believe they need some emergency cash stashed in the home. This thinking is reinforced with a survey conducted this year that showed 80% of people now keep some emergency cash at home, with 10% holding between £200 and £500 in cash, and 4% keeping even more.
...

https://news.yahoo.com/10-brits-still-hide-cash-mattress-heres-thats-not-good-idea-105542169.html

Bold part is some refreshing honesty from a politician:

Putrajaya’s push for Malaysia to become a cashless society is partly to make it harder for corruption to take place, said Prime Minister Tun Dr Mahathir Mohamad.

He explained that cashless transactions entail data trails that can enable authorities to observe and detect the suspicious movement of money.
...
During the Asean Summit in Singapore last month, the PM already expressed interest in pursuing a cashless Malaysia, saying he was inspired by discussions with India Prime Minister Narendra Modi.
...

https://www.msn.com/en-my/news/national/dr-m-no-cash-no-corruption/ar-BBQkrlY?li=BBr8Hnu

...
The Chinese market for mobile payment offers not only market opportunities for solution providers intending to operate within the domestic market but also learning points for global mobile payment solution providers. China is a unique case study that can showcase to the world that cashless societies are becoming increasingly possible. Already, 40% of Chinese users carry less than RMB100 (US$15) in cash and mobile payment has become common among Chinese citizens.
...

https://www.marketwatch.com/press-r...st-to-2023---researchandmarketscom-2018-12-04

Sweden is heading towards becoming a completely cash-free society but the country is being urged to keep producing physical cash by financial authorities.

Half the nation's retailers are expected to completely reject cash by 2025.

Financial authorities in the country are lobbying for the continued production of notes and coins until the government fully understands the ramifications of going completely cash-free.
...
Sweden's central bank is experimenting with a central online currency, known as e-krona, to keep firm control of the money supply.

'When you are where we are, it would be wrong to sit back with our arms crossed, doing nothing, and then just take note of the fact that cash has disappeared,' said Stefan Ingves, governor of Sweden's central bank, known as the Riksbank.
...
Many businesses in the Scandinavian nation are now entirely cashless.

Bills and coins represent just 1 per cent of the economy, compared with 10 per cent in Europe and 8 per cent in the United States, according to a report in the Financial Post.

The revolution away from cash is startling among millenials and Gem z individuals as almost 95 per cent of their purchases are made via debit card or a smartphone app called Swish, a payment system set up by Sweden's biggest banks.
...
'We need to pause and think about whether this is good or bad, and not just sit back and let it happen,' said Mats Dillén, the head of a Swedish Parliament committee studying the matter.

'If cash disappears, that would be a big change, with major implications for society and the economy.'
...

https://www.dailymail.co.uk/science...eating-notes-coins-country-goes-CASHLESS.html

 

[rblong2us]

because how can you not like a post that involves someone in Africa called -


Sthembiso Sithole :rotflmbo:

 

[pmbug]

I posted previously about the effort in NYC to force businesses to accept cash. Looks like New Jersey is pursuing a similar action:

Lawmakers in New York City and New Jersey are working to pass bills that would require retailers to accept cash, alleging that the growing cashless trend discriminates against low-income customers.
...
The fines would be 10 times higher in New Jersey, with businesses having to pay $2,500 for their first violation and up to $5,000 for subsequent offenses. The New Jersey Senate Commerce Committee voted Dec. 3 to advance the bill, which was passed by the state Assembly in June and will now be voted on by the full state Senate.

Chicago, Washington, D.C., and Philadelphia have considered similar measures, but none have been signed into law yet.
...

https://www.cnbc.com/2018/12/13/nyc...usinesses-alleging-bias-against-the-poor.html

 

[pmbug]

I'm cross posting this from the Zimbabwe thread:

Zimbabwe will introduce a new currency in the next 12 months, the country’s Finance Minister said, as a shortage of U.S. dollars plunges the financial system into disarray, forcing businesses to close and threatening unrest.
...
But without enough hard currency to back up the $10 billion of electronic funds trapped in local bank accounts, businesses and civil servants are demanding payment in cash which can be deposited and used to make payments both inside and outside the country.
...

https://af.reuters.com/article/commoditiesNews/idAFL8N1ZC056

Looks like the people in Zimbabwe don't trust the banking system.

 

[rblong2us]

businesses and civil servants are demanding payment in cash which can be deposited and used to make payments both inside and outside the country.
...

There is no outside .......

 

[pmbug]

The more I read that sentence, the more cryptic it seems. Does Zimbabwe have some sort of capital controls imposed? Are the local banks restricting international transactions? Are the locals wanting to carry cash across the border to deposit in foreign banks? The more I read it, the more questions I ponder.

 

[pmbug]

So you might recall from 2.5 years ago, post #34 talking about an exchange rate between cash and bank accounts. Looks like the IMF is now promoting the idea:

...
One option to break through the zero lower bound would be to phase out cash. But that is not straightforward. Cash continues to play a significant role in payments in many countries. To get around this problem, in a recent IMF staff study and previous research, we examine a proposal for central banks to make cash as costly as bank deposits with negative interest rates, thereby making deeply negative interest rates feasible while preserving the role of cash.

The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money. This conversion rate is key to the proposal. When setting a negative interest rate on e-money, the central bank would let the conversion rate of cash in terms of e-money depreciate at the same rate as the negative interest rate on e-money. The value of cash would thereby fall in terms of e-money.

To illustrate, suppose your bank announced a negative 3 percent interest rate on your bank deposit of 100 dollars today. Suppose also that the central bank announced that cash-dollars would now become a separate currency that would depreciate against e-dollars by 3 percent per year. The conversion rate of cash-dollars into e-dollars would hence change from 1 to 0.97 over the year. After a year, there would be 97 e-dollars left in your bank account. If you instead took out 100 cash-dollars today and kept it safe at home for a year, exchanging it into e-money after that year would also yield 97 e-dollars.

At the same time, shops would start advertising prices in e-money and cash separately, just as shops in some small open economies already advertise prices both in domestic and in bordering foreign currencies. Cash would thereby be losing value both in terms of goods and in terms of e-money, and there would be no benefit to holding cash relative to bank deposits.

This dual local currency system would allow the central bank to implement as negative an interest rate as necessary for countering a recession, without triggering any large-scale substitutions into cash.

Pros and cons

While a dual currency system challenges our preconceptions about money, countries could implement the idea with relatively small changes to central bank operating frameworks. In comparison to alternative proposals, it would have the advantage of completely freeing monetary policy from the zero lower bound. Its introduction would reconfirm the central bank’s commitment to the inflation target, rather than raise doubts about it.

Still, implementing such a system is not without challenges. It would require important modifications of the financial and legal system. In particular, fundamental questions pertaining to monetary law would have to be addressed and consistency with the IMF’s legal framework would need to be ensured. Also, it would require an enormous communication effort.

The pros and cons of the system are country specific and should be carefully compared to other proposals, such as higher inflation targets, for increasing monetary policy space in a low-interest environment. We consider these issues, and more, in our research.

https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/

 

[ancona]

Americans would be difficult to convince. I am personally a devout "hard money" guy. The idea of all my transactions being electronic is abhorrent to me on many levels, not the least of which is the government being able to know my whereabouts at any given time, and what I purchased, when and where. It's simply none of their fucking business I say. Cash is and will always be king in my book.

 

[pmbug]

If the Fed pushes a scheme like the above to effect negative interest rates, what are the chances that folks wake up to what real money is.

 

[ancona]

The odds approach 100% If the fed ever dared to start skimming deposits like that, people would simple empty their accounts and buy up hard assets. The economy would roll over and everything would come to a screeching halt. Most likely, those in charge would be found suicided somewhere as a lesson to others. This ain't Venezuela yet my brothers, and there are just too many weapons in far too many freedom loving patriot hands to allow that sort of shenanigans to go on. It really is a step too far.

 

[11C1P]

.

This won't help the plastic fans.

.

https://6abc.com/politics/bill-looks-to-require-philly-businesses-to-accept-cash/5121309/

.

"PHILADELPHIA (WPVI) --
A Philadelphia City Councilman is proposing a ban on stores that do not accept cash due to the impact it has on lower income residents.

"I am not saying its intentional discriminatory, but I think it is certainly discriminatory because the overwhelming number of people who do not have credit are low income, minority immigrants," Councilman Bill Greenlee, the bill's sponsor, said.

Greenlee and other councilmembers are concerned the number of brick and mortar retailers in the city embracing a cashless model could grow beyond the current small number.

As that happens, they argue, people who are "unbanked" or don't have access to a debit card or a phone pay app would be at a serious disadvantage.

Greenlee added that some people would simply rather use cash because of the security concerns that come with using a card.

This bill is nothing new. Massachusetts enacted a pro-cash law decades ago and others have followed.

"Washington, D.C. has already put in such legislation, New York was contemplating it, Jersey is doing it. It seems to make sense that a regular place where any of us can go in should take the monetary unit of the United States," Greenlee said.

A committee hearing was held Tuesday. The committee will decide whether the measure moves forward to the full council.

Most seemed to indicate they were backing the bill. However, there was some criticism.

One point of criticism said it may be stifling innovation.

Another point was made that the City of Philadelphia does not accept cash in many of its transactions with citizens.

A recent survey by the FDIC found that about 7 percent of people don't have bank accounts and can't obtain a debit card."


.

One big weakness in this law, they don't mention in this story, but I read a couple days ago on another site, is that certain types of stores are exempt, like membership places like Sam's Club, Costco, etc. So if I'm a guy running a store that only takes plastic (or paying with your phone) I make it a members only store, but the membership is cheap, say $1/month or a full year for $10. Pretty easy sidestep there IMO.

.

 

[pmbug]

Just for posterity:

I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
...

https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx

So it looks like these State laws being enacted everywhere are important, but they are going to force a showdown over this "unencumbered interest rate policy" bs if they can find a way to get around the legal obligations/contract banks have with customers.

 

[pmbug]

nvest In Gold As a Hedge In Cashless Society – Ex IMF Rogoff
15, February

– Invest in gold as a hedge, in pensions & as a store of value – Rogoff
– Investing in and owning gold as a hedge will become more important as it will have “enormous value” in a cashless society
– Bitcoin and cryptocurrencies are not an effective replacement for paper money … but gold’s role is likely to increase as cash is used less and “the trend towards digital currencies” will benefit gold
– “There is an incredible disconnect between the fact that cash is disappearing in legal, tax-compliant transactions but exploding in terms of how much central banks are printing” says Rogoff
– It makes sense for investors, HNW individuals, pension funds and central banks to invest a “percentage of their assets in gold” as a hedge
– “Gold is also likely to increase in value” as central bank and global investment demand increases
– “As a hedge, gold has enormous value…” Rogoff concludes

https://news.goldcore.com/us/gold-blog/invest-in-gold-as-a-hedge-in-cashless-society-ex-imf-rogoff/

 

[pmbug]

Rogoff pounded the drum on All Things Considered / NPR yesterday:

...
ROGOFF: There has to be views about how big cash transactions should be. ...

https://www.npr.org/2019/02/18/695755973/the-pros-and-cons-of-moving-toward-a-cashless-society

What an asshole.

 

[11C1P]

.

Just had to read the first paragraph to know I don't like him.
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"NPR's Mary Louise Kelly speaks with economist Kenneth Rogoff about what would happen if the U.S. were to get rid of a lot of its paper currency, particularly larger bills, as he advocates."
.

I've been saying just the opposite. They quit making the higher denom's after WWII, you know when a car might cost $1,000 & a house a few thousand. Counting out a small stack of 100's isn't that big of a deal, for smaller purchases, but who really wants to count $100 bills into 5 & especially 6 figure's (or more) let alone carry it around? A few years back I bought a Jeep (used) for $6,800 in cash. Funny thing is, I coudn't get them to drop under $7,700, for nothing, but when I told him I had the cash in my pocket, he had to "go talk with his manager". He came back & said he could go as low as $7,400, I told him no & he said that the Jeep was worth all of that & more, I said "maybe", as I walked away but added "I've only got $6,800 on me." (we get to lie too! :rotflmbo He said "DEAL!" before I could even turn to look at him. I really don't think if he'd thought I was getting it financed or writing a check that he would've went any lower, but as they say money (actual green $) talks. I know I've had occasions where I've done similar, but usually with much smaller amounts. I also know that I've had it done to me when I sell stuff through a local online ad site & I figure I won't take less than say $125, but the guy only has $120 "on him". The $5 difference vs potentially getting $5 more IF the guy comes back just isn't worth bothering most of the time at least. Funny thing about that Jeep, I actually had about $8,000 in my pocket, but I wanted to pay tax & license right there too, but since I told him I only had $6,800 on me, I went in to the bathroom put $6,800 in one pocket the rest in another. I then told him I'd have to run home to get the cash for the tax & license. While I might've otherwise just drove a couple blocks away, I had to drive home anyway to pick up the wife to bring one of the vehicles back, so the round tripper wasn't really an extra trip anyway.

.

 

[pmbug]

That NPR article really drove home the point for me that, while Rogof has bonafides for the field, with respect to the cashless society issue, he's a propagandist.

 

[pmbug]

Philadelphia is the first major U.S. city to ban cashless stores, placing it at the forefront of a debate that pits retail innovation against lawmakers trying to protect all citizens' access to the marketplace.

Starting in July, Philadelphia's new law will require most retail stores to accept cash. A New York City councilman is pushing similar legislation there, and New Jersey's legislature recently passed a bill banning cashless stores statewide. A spokesman for New Jersey Gov. Phil Murphy, a Democrat, declined to comment on whether he would sign it. Massachusetts has gone the farthest on the issue and is the only state that requires retailers to accept cash.
...

https://www.wsj.com/articles/philadelphia-is-first-u-s-city-to-ban-cashless-stores-11551967201

h/t: http://gata.org/node/18928

 

[pmbug]

Looks like I missed this one from a week ago (roughly) and there is a lot to unpack in it:

... BIS General Manager Agustin Carstens gave a speech at the Central Bank of Ireland 2019 Whitaker Lecture. Under the heading, ‘The future of money and payments‘, Carstens mapped out what has been a long standing vision of globalists – namely, to acquire full spectrum control of the international financial system through the gradual abolition of what Bank of England governor Mark Carney has called ‘tangible assets‘ i.e. physical money. ...

More: https://www.zerohedge.com/news/2019...boss-outlines-central-bank-digital-currencies

 

[pmbug]

 

[pmbug]

Sweden, nation that pioneered living without cash, warns: Hoard your banknotes

As Britain edges towards a cashless future, Sweden has urged its citizens to stockpile change in case of power cuts, a cyber-attack or war
...

https://www.thetimes.co.uk/edition/...out-cash-warns-hoard-your-banknotes-6f72jqbf3

 

[ancona]

Cashless does nothing but disenfranchise the poor and unbanked. It is Orwellian in the extreme and will never be fully acceptable.

 

[pmbug]

Australia's Liberal Party government has announced that it will soon be illegal to purchase anything over $10,000 with cash. The government says it's "encouraging the transition to a digital society" and cracking down on tax evasion. But not everyone is happy with the move.
...
The ban starts on 1 July 2019 and any payment over $10,000 will have to be made by check or credit/debit card. The government will enforce the measure by allocating roughly $300 million for what it calls the Black Economy Standing Taskforce. ...
...
Australians have a strange relationship with cash - strange in the sense that they still use it. Roughly 37 per cent of all commercial transactions in Australia are made using cash. That number is just 32 per cent in the US and 15 per cent in Sweden. Many Swedes are angry about its slow move to a cashless society, arguing that going completely digital causes security concerns. And India began phasing out a whopping 86 per cent of its currency in November of 2016 by invalidating ₹500 and ₹1000 notes as legal tender.
...
Today it's any sum over $10,000 in Australia, but anyone with their eyes open can see where this is going. ...

https://www.gizmodo.com.au/2018/05/...l-purchases-over-10000-starting-july-of-2019/

 

[pmbug]

San Francisco officials voted Tuesday to require brick-and-mortar retailers to take cash as payment, joining Philadelphia and New Jersey in banning a growing paperless practice that critics say discriminates against low-income people who may not have access to credit cards.
...

More: https://apnews.com/e4e95476e4e74756b3973ed23fa3b00e

 

[pmbug]

...
The IMF has noted that central bankers typically cut interest rates by 5% to 6% during recessions. However, with interest rates in many countries close to zero, this does not give them enough room to cut as it has been considered difficult to cut rates below zero because people could just withdraw physical cash from the bank to avoid having to pay to keep their money in digital form.

The IMF, maybe taking inspiration from its namesake the Impossible Mission Force (cue Tom Cruise), has recently provided a handy guide for its 189 member countries on how to enable deep negative rates (emphasis, deep), saying that zero need not be a bound(ry). What is noteworthy about the release of this document is that it indicates that in central bank circles, negative rates has moved from a “should we do it” discussion to “how do we do it”.

While the idea of paying to hold money, or even paying people to borrow money, may seem absurd, the IMF sees deep negative rates as “critical for central banks to maintain effectiveness of monetary policy in the future and will help mitigate the hardships associated with prolonged recessions”. At least they are explicit that lower interest rates “work” because they favour borrowers at the expense of lenders (i.e. savers) as borrowers are more likely to spend any reduction in their loan repayments. Seems like a one-sided hardship mitigation.

In additional to setting a lower exchange rate between paper and digital currency (e.g. when depositing $100 cash in a bank, you only get $98 credit to your account), which is the IMF’s preferred approach, they discuss other methods of enforcing negative interest rates including:

• Cash withdrawal limits or limits on cash deposits
• Purposely keeping low inventory of cash in bank branches
• Banning storage of paper currency as a business
• Putting restrictions on flows of paper currency in and out of the country
• Retiring large denomination notes
• Abolishing paper currency outright

If you think this all sounds unlikely, governments have shown a willingness to consider similar measures. The Federal Government is still pushing forward with its $10,000 cash payment limit to commence on 1 January 2020 (delayed from 1 July 2019). ...

More: https://www.abcbullion.com.au/investor-centre/pdf/china-buys-gold-as-trade-wars-escalate

 

[rblong2us]

Great ideas

Could convince a lot more folk to find alternative means of exchange (-:

 

[pmbug]

The Economist published a real turd of an article:

...
In the main the prospect of a cashless economy is excellent news. ...

https://www.economist.com/leaders/2...ies-must-start-planning-for-a-cashless-future

 

[pmbug]

...
In the 2018-19 Budget, the Government announced it would introduce an economy-wide cash payment limit of $10,000 for payments made or accepted by businesses for goods and services. Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. The Black Economy Taskforce recommended this action to tackle tax evasion and other criminal activities.

The Government has today released for public consultation exposure draft legislation and accompanying explanatory material to implement the economy-wide cash payment limit from 1 January 2020 and for certain AUSTRAC reporting entities from 1 January 2021.

Submissions to the consultation are open until Monday 12 August 2019.
...

https://treasury.gov.au/consultation/c2019-t395788

 

[pmbug]

Watching through the video posted in the NIRP thread ( https://www.pmbug.com/forum/f13/negative-interest-rates-nirp-3188/index2.html#post34179 ), they referenced an empirical study of cash restrictions. I looked it up and found it:

... The conclusion of this paper is that cash has a minor influence on the shadow economy, crime and terrorism, but potentially a major influence on civil liberties. ...

https://www.econstor.eu/bitstream/10419/162914/1/Schneider.pdf

The author, Friedrich Schneider has participated in many studies and research papers published for the IMF and such. The St. Louis Fed has a convenient index to his work here:

https://ideas.repec.org/e/psc166.html

 

[pmbug]

The Wall Street Journal is now beating the drum:

The future of money might be a digital version of the cash that's already in people’s wallets -- potentially upending the currency system that the world has known for many decades.
...
... central bankers and governments ... are increasingly warming to the idea of "digitizing" their own national currencies. That is, they would issue money that would exist only virtually, without a paper or coin equivalent, and be universally accepted as a form of payment. ...

h/t: http://gata.org/node/19472

 

[pmbug]

Most Europeans still cling to physical cash while nations in Asia have embraced cashless payments the most. This is the conclusion of the 2018 World Cash Report that lists different studies analyzing peoples’ habit to pay by cash or card (or even mobile).
...
Japan is one of the exception to the rule of Asian countries loving cashless payments. The government has recently revealed its “Cashless Vision” which is looking to increase cashless payments to 40 percent by 2025. ...

https://www.statista.com/chart/19868/share-of-cash-payments-in-different-countries/

 

[pmbug]

Here's a twist on the cashless society issue... Cash is disappearing presumably because people value it too much.

Some Australians are burying it. The Swiss might be hiding it. The Germans are probably hoarding.

Banks are issuing more notes than ever and yet they seem to be disappearing off the face of the earth. Central banks don’t know where they have gone, or why, and are playing detective, trying to crack the same mystery.

The puzzle is especially perplexing since societies and companies are going cashless, given the boom in payments by cards and cellphone apps.
...
The European Central Bank, and others, tried asking the public for help.

“Everyone says that they are not hoarding cash but the money is clearly somewhere,” said Henk Esselink, head of the issue and circulation section in the ECB’s currency management division.

Australia’s central bank says its best guess is that only around a quarter of the bank notes in circulation are used for everyday transactions. Up to 8% of cash is used in the shadow economy—tax avoidance or illegal payments—while as much as 10% could have been lost. That is $7.6 billion Australian dollars ($5.2 billion) missing at the beach or in couch cushions.

The biggest use of cash is as a store of wealth “in safes, under beds and at the back of cupboards, both here in Australia and elsewhere around the world,” Mr. Lowe, the RBA governor, said.

Officials at the Swiss National Bank ran with another theory: hoarded bank notes should wear out less because they aren’t being used for everyday transactions.

Demand for high-denomination bank notes tends to rise when interest rates are low, households feel distrustful of the banking system or people want to make transactions anonymously.
...
Around a third of New Zealand’s new bank notes headed overseas in 2017, up from 6% four years earlier. That happened around the time that tourism overtook dairy as the country’s main export money-spinner, leading officials to speculate on the role played by currency exchanges, especially in Asia.

The trail mostly ran cold after that. The bank could only identify the whereabouts of around 25% of New Zealand’s cash.

“Our sense is that we’re in the same boat as a lot of other central banks out there,” said Christian Hawkesby, assistant governor at the RBNZ. “We can’t fully explain why holdings of cash are rising and where they are going.”

https://www.wsj.com/articles/the-wo...vSource=cx_picks&cx_tag=collabctx&cx_artPos=2

 

[pmbug]

The Federal Reserve is investigating the second significant disruption in 2019 of a payments service administered by the U.S. central bank.

Certain bank transactions were delayed after ACH -- which stands for the automated clearinghouse system -- experienced delays, but it is now up and running.

“The FedACH service, which processes transactions for commercial banks, is currently operating normally after experiencing delays in processing yesterday afternoon and early this morning,” Jean Tate, a spokeswoman at the Atlanta Fed, said in an e-mailed statement. “Some customers experienced delays in receiving confirmations of yesterday’s transactions. Federal Reserve technical staff continue to investigate the root cause of the issue.”
...

https://www.bloomberg.com/news/arti...nt-system-operational-after-suffering-a-delay

Digital systems can fail.

h/t: https://www.zerohedge.com/markets/n...utage-hits-due-federal-reserve-network-issues

 

[11C1P]

`

French central banker says digital currency cannot be private

https://www.oann.com/french-central-banker-says-digital-currency-cannot-be-private/

"PARIS (Reuters) – Digital currency could be useful as cash transactions dwindle in some countries but central banks should be in charge of issuing it, not private companies, Bank of France Governor Francois Villeroy de Galhau said on Saturday.

Spurred by the rise of cryptocurrencies and Facebook’s plans to launch its Libra currency, central banks worldwide are looking into the possibility of issuing digital money to prevent the loss of state control over money.

Villeroy said the proposals were not a reaction to Facebook’s plan, responding instead to fast-evolving technology and some banks’ need for digital currency. He added that private citizens could also start wanting an alternative to cash.

“In some northern European countries, notably Sweden and the Netherlands, the use of bank notes is falling extremely quickly and they are wondering whether we need to give citizens the right to digital money that is no longer a physical bank note but..."

.

 

[pmbug]

The World Economic Forum (WEF) — together with some of the world's major central banks — has created a central bank digital currency (CBDC) policymaker toolkit.

According to an announcement on Jan. 22, the toolkit is the WEF's attempt to help policy-makers understand whether deploying a CBDC would be advantageous and guide them through its design.

The WEF collaborated with regulators, central bank researchers, international organizations and experts from over 40 institutions to develop the framework. ...

The WEF’s framework divides CBDCs into three categories: retail, wholesale and hybrid. The first category allows non-financial users to hold digital currency accounts, while the second is an electronic system granting access to the central bank reserve that could be used by commercial banks and other financial institutions for interbank and security transactions.

Hybrid CBDCs allow financial institutions that do not usually have access to a central bank deposit facility to hold reserves at it. This would enable stronger safeguards and monitoring of those organizations and improve interoperability between different payment systems, according to the WEF.

The paper explains that in the case of a DLT-based CBDC, the central bank would preserve full control over the issuance of the digital currency:

[The central bank] could delegate transaction approval to a more decentralized network, most likely consisting of regulated financial institutions. Transaction approval could follow a pre‐specified consensus process determined by the central bank, which could include privileges for the central bank such as transaction ‘veto’ powers or visibility. It is also possible to develop a DLT system in which the central bank remains the only validating node yet it benefits from other advantages related to DLT.

...

https://cointelegraph.com/news/worl...s-framework-for-central-bank-digital-currency

This is the framework paper if anyone cares for the details: http://www3.weforum.org/docs/WEF_CBDC_Policymaker_Toolkit.pdf

 

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DAVOS, Switzerland — A growing number of voices are calling for the U.S. to issue a "digital dollar" as China continues to work on a digital version of its own currency.

Users of the U.S. dollar are "underserved by an analogue currency in a digital world," Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC), said during a side event at the World Economic Forum in Davos.
...

More: https://www.msn.com/en-us/money/mar...ith-a-digital-yuan/ar-BBZgb6L?ocid=spartandhp

 

[rblong2us]

'DAVOS, Switzerland — A growing number of voices are calling for the U.S. to issue a "digital dollar" '

would that be the local folk who live in Davos, the workforce who keep them comfortable, or those opinionated 'leaders' of the free world who occasionally visit ?

 

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The Federal Reserve is looking at a broad range of issues around digital payments and currencies, including policy, design and legal considerations around potentially issuing its own digital currency, Governor Lael Brainard said on Wednesday.

Brainard’s remarks suggest more openness to the possibility of a Fed-issued digital coin than in the past.

“By transforming payments, digitalization has the potential to deliver greater value and convenience at lower cost,” Brainard said at a conference on payments at the Stanford Graduate School of Business. She did not touch on interest rates or the current economic outlook.

“But there are risks,” Brainard said, in a partial reprisal of her own and other global central bankers’ worries about the rise of private digital payment systems and currencies, including Facebook’s Libra digital currency project.

“Some of the new players are outside the financial system’s regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability and monetary policy transmission,” she said.

Central banks globally are debating how to manage digital finance technology and the distributed ledger systems used by bitcoin, which promises near-instantaneous payment at potentially low cost.

The Fed is developing its own round-the-clock real-time payments and settlement service and is currently reviewing 200 comment letters submitted late last year about the proposed service’s design and scope, Brainard said.

But the Fed is also, she said, “conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC (central bank digital currency).”

Dozens of central banks globally are also doing such work, a recent international study showed, with China moving ahead on plans to issue a digital coin.
...

https://www.reuters.com/article/us-...ank-digital-coins-brainard-says-idUSKBN1ZZ2XF

 

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From a cup of coffee to a car ride, mobile devices or plastic cards are becoming the preferred, and sometimes exclusive, methods of payment in many parts of the world.

But being forced to pay that way, rather than having the option of using cash, may soon be illegal in New York City.

The City Council approved legislation on Thursday that prohibits stores, restaurants and other retail outlets from refusing to accept hard currency.

The measure puts New York at the forefront of a national movement to rein in so-called cashless businesses: New Jersey, Philadelphia and San Francisco all approved such bans last year, and several other cities are considering similar moves. Massachusetts has had a law requiring retailers to accept cash and credit since 1978.
...

https://www.nytimes.com/2020/01/23/nyregion/nyc-cashless-ban.html

 

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Estimates vary but it’s widely predicted that Britain is well on the way to becoming a cashless society, and could reach that state within ten to 15 years.

Has the public been consulted? No. Is the Government showing signs of concern about the millions of people who would struggle to cope with a cashless society? Not that I’ve noticed.

Most of us will have experienced how increasingly difficult it is even to get access to one’s own money.
...

More: https://www.dailymail.co.uk/debate/...LOVER-greedy-banks-allowed-make-cashless.html

... with the opening of the Tesco Express store on High Holborn in central London, it seems that another step has been taken on the journey towards a cashless society.

The store has fourteen till points but just two are staffed - to handle alcohol and tobacco sales - and it will only take payments from contactless cards, debit and credit cards, Apple Pay and Tesco Pay+.

Tesco claim that by going cashless, it will mean that customers will be able to complete their payment more rapidly, but at what cost? ...

https://www.forbes.com/sites/andrew...opening-of-first-cashless-store/#4e86ab4620c4