Download AOTW: The Global War on Cash

AOTW: The Global War on Cash
February 17, 2017
Good morning loyal readers,
Hopefully the weather man is right, and that all the snow you shoveled this week will melt this
afternoon.
It has been a good week for the markets with the major indices in the green.
This week’s article takes a look at a global war many of us may not have realized is occurring: The
global war on cash. Governments around the world are pushing for a cashless society. If you are like
me, and would rather tap your Visa to pay for a coffee than deal with change in your pocket (which
will end up under the seat in your car never to be seen again), this may seem like a great idea.
However, in a world where people are already concerned with their privacy, a cashless society takes
this concern to a whole new level.
The motivation behind transitioning to a cashless society is not convenience, or efficiency. It is to
combat terrorism, organized crime, and tax evasion. Electronic payments must always go through a
third party. Therefore every transaction in a cashless society would be tracked. This means that
certain types of transactions (gambling? the sale of alcohol after 2 am?) could be barred. This also
means that government and central banks could easily invoke monetary policy (NIRP) as the
population would have no option to hold cash (at a zero interest rate) outside of the system.
Therefore central banks and governments could more directly influence when the population
spends, and when the population saves. Because every transaction would be tracked, every
transaction could be taxed. Given the magnitude of the informal cash economy, this would
significantly increase tax revenue.
Apart from privacy issues, there are also cybersecurity issues for the population. According to
Juniper Research the cost of online data breaches is already expected to reach $2.1 trillion by 2019.
With increased cashless transactions comes more third party providers which opens the door for
more cybersecurity threats.
Basic human rights have also been (inadvertently) sacrificed in the name of demonetization. India
for example demonetized 500 and 1000 rupee notes in November 2016. Overnight, this eliminated
86% of the country’s notes. Some notes could be exchanged for higher denominations (up to a
limit), but the remainder had to be routed through a bank account – in a country where only 50% of
people have bank accounts. There have been 112 reported deaths related to this demonetization due
to waiting in lines for days to exchange money, suicide, and inability to pay for essential services for
those who were unable to exchange their denominations. Perhaps the transition in this case was just
too rapid, but a large portion of the world still relies on cash, and even in the developed world cash
is heavily relied upon for legitimate transactions.
Contego Wealth Management | Raymond James Ltd.
750-45 O’Connor Street | Ottawa, ON | K1P 1A4
 613.369.4600 | Toll Free: 1.866.552.0889 | Fax: 613.369.4699
www.raymondjames.ca/contego
We are heading towards a cashless society, the question just remains whether cash will ever be
eliminated entirely. As this event moves closer, the portion of cash transactions which are illegal
transactions surely increases. Therefore if you are doing nothing wrong, and have nothing to hide –
is it really that big of an issue if people can track all your transactions? Some would say yes, some
would say no.
The full article can be found here: http://www.visualcapitalist.com/global-war-cash/
Enjoy your weekend,
Kale Wild
Raymond James | Cash Management Specialist |
Contego Wealth Management
750-45 O’Connor Street | Ottawa, ON | K1P 1A4
 613.369.4625 | Toll Free: 1.866.552.0889 | Fax: 613.369.4699
[email protected] | www.raymondjames.ca/contegowealthmanagement
This newsletter has been prepared by Contego Wealth Management team and expresses the opinions of the author and not necessarily
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Contego Wealth Management | Raymond James Ltd.
750-45 O’Connor Street | Ottawa, ON | K1P 1A4
 613.369.4600 | Toll Free: 1.866.552.0889 | Fax: 613.369.4699
www.raymondjames.ca/contego