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Apparently the Reseve Bank is thinking of launching a digital currency that will be one to one linked to the NZ dollar.
Is this the next step towards transitioning the country to a cashless society?
This Yahoo! Finance story provides some detail about the proposal and although the RBNZ is quoted as saying "cash is here to stay for as long as some of us need it", I wouldn't be so sure.
As I've said in previous columns, I only carry a small amount of emergency money these days, usually in the form of a single $20 note and haven't pocketed a coin in many, many years.
The benefits (to the government and the banks) of going cashless are very clear.
Removing cash from the equation would undermine the black economy which allegedly costs huge sums each year in lost tax revenues. Indeed, it would be much easier to remove cash and ensure that every Tom, Dick and Mary were paying their fair share of tax than to chase down those who hide their revenues behind complex structures such as trusts, offshore accounts or the other many and varied mechanisms seen in The Pandora Papers.
It seems that tax avoidance/evasion must not be allowed... unless you're rich enough that is! :-)
However, there's a degree of irony that going cashless by way of a decent crypto-currency (monero perhaps?) makes it easier to engage in "under the counter" transactions, even at an international level. In fact, given the presence of a growing number of "dark web" trading sites, I'd wager that crypto has done more to boost the black economy than cash would have been able to.
The biggest risk with the switch away from cash though is the inconvenience that occurs when critical infrastructure fails.
If the lights go out or comms links fail, well you're stuffed.
Standing at the supermarket checkout with a trolley full of frozen goods is no fun if the EFTPOS or other electronic payment service suddenly goes down.
At least in the old days they'd haul out the zip-zap machine and do the transaction manually but today you're right up shite creek without a paddle when this happens and, worryingly, it does happen.
How the hell will we get by the next time a significant solar event takes out the power grid or some of our comms infrastructure? Do you have enough money down the back of the sofa to buy groceries, petrol or other essentials for the days or perhaps even weeks it might take to get things rolling again?
So just how far down the road are we to a cashless society?
Well I heard on National Radio a week or two ago that a woman was refused cash at her local bank. She was told that they do not dispense cash in over-the-counter transactions any more and she'd have to use the ATM. The problem was that she wanted some *COINS* to give as gifts to grandchildren and ATMs do not dispense coins.
Does this signal a definite push away from cash?
Possibly... although I dare say the narrative would be that it's to reduce risk in these days of Covid.
All I know for sure is that interesting times lie ahead.
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