Today, most of our monetary transactions are done with plastic or via bank apps,

Question

Today, most of our monetary transactions are done with plastic or via bank apps, all of which are easily tracked. Even craft vendors at small town festivals use apps on their smart phones and tablets to accept cashless payments. Some argue that actual bills and coins are no longer necessary in today’s world except in cases where illegal goods and services are being exchanged. Do you agree or disagree with this? Could our society be cashless? How could you give your niece $25 for her birthday? What behaviors would have to change for that to occur? Who would resist, and why? Who would benefit? What would the risks and/or rewards be of be cashless?

Explanation / Answer

My opinion: The world will not go cashless in conceivable future.

First and most important: US is a developed country where every small-scale seller, buyer has smartphones, apps, credit cards, requiring less physical cash. But in less developed or developing countries, cash is the primary mode of all business transactions. So, the term used - "Our" - is absolutely relative.

Two: Going cashless will require each and every seller and each and every buyer to have electronic payment system, even if in their phone apps. This is next to impossible to implement at a mass scale.

Three: Risk aversion. Many consumers and sellers, especially small-scale sellers, will resist a cashless economy due to "Fear Factor". Electronic transactions can go haywire any moment, the accounts hacked any moment, thus security compromised. Physical theft of cash is equivalent to electronic theft of cash-equivalents.

Four: It will perhaps not be possible to keep a central control over tracking how many transactions have been completed in the economy. Going cashless, for example, Fed will not be able to change money supply if there is suddn surge or slack of increasing price level. Inflation will become beyond control. Also, effect of any monetary policy will be impossible to evaluate, rendering central bank ineffectual.

Five: Cashless economy will require impeccable financial system, institutions and regulations which cannot be breached by malpractice. Such a system is not possible to be built at such a gigantic scale.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.