Money in physical form such as banknotes and coins. is like water: Both are basic needs. In the Western world, we take them for granted.
Cash is under attack in the United States, and elsewhere around the world. The very idea of physical The money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. is being challenged by businesses and intellectuals alike. But they couldn’t be more wrong.
Former U.S. Treasury Secretary Larry Summers has called for abolishing the $100 bill. Digital currencies and A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. methods are proliferating. PayPal spent obscene amounts of From the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for g... More on a Super Bowl ad calling their service “New Money” as opposed to cash. Behind the hype of technology, PayPal and its brethren are simply businesses trying to make a buck, not that there is anything wrong with that.
Of course, the digital age is something to embrace, and new ways of paying will continue to be introduced. But Americans need to recognize the risks and benefits of different payment instruments, and know that the A banknote (or ‘bill’ as it is often referred to in the US) is a type of negotiable promissory note, issued by a bank or other licensed authority, payable to the bearer on demand. itself is a technology that remains a necessary part of our financial security – personally, nationally and internationally. Banknotes are convenient and universally accepted, and they offer unparalleled privacy as a Device, tool, procedure or system used to make a transaction or settle a debt..
At a personal level, cash enables people to manage their financial security themselves. There are risks associated with storing cash, but each person can manage those risks by limiting the amount they carry with them or keep at home. You can lose the cash in your wallet, but no other part of your financial security is at risk.
The risks associated with electronic payment instruments are far more diverse and severe. Losing your credit cards or being the victim of digital hackers can lead to a whole host of problems including denied payment, card theft, card skimming, identity theft, account takeover, fraudulent transactions and data breaches. According to the digital security company Gemalto, more than 1 billion personal records were compromised in 2014.
Each of those incidents leads to countless hours of dealing with financial institutions and law enforcement to try to gain access back to accounts, redress fraudulent activity and reclaim one’s own identity.
At a national level, the benefits of using cash far outweigh the risks, too. Counterfeiting is a risk associated with banknotes, although one that is much smaller than in popular imagination. In 2013, the U.S. Secret Service recovered approximately $156 million in The reproduction or alteration of a document or security element with the intent to deceive the public. A counterfeit banknote looks authentic and has been man- ufactured or altered fraudulently. In m... More U.S. currency, compared to a total circulation of just under $1.2 trillion.
Large numbers of banknotes are hard to transport, conceal and use without detection. Cash seizure is a prominent law enforcement tool and one that can hit criminals hard. Indeed, if you are a serious criminal, you avoid using cash. You’d rather hide your money in an offshore bank account than store large numbers of banknotes.
But the benefits of currency for national security aren’t limited to law enforcement. Cash has repeatedly demonstrated its importance in times of crisis. When natural disasters knock out an electrical grid for days or even weeks, cash is a saving grace for residents to obtain critical supplies.
During the global financial crisis following the collapse of Lehman Brothers in 2008, cash became a Secure container for storing money and valuables, with high resistance to break- ing and entering. haven for consumers looking to keep their assets intact. Indeed, the volume of The value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and com- prises only the banknotes and coins in... More increased dramatically in 2008. In one example, Australia’s See Central bank. saw a 12 percent rise in demand for its currency in late 2008 thanks to an increase in Banknote demand motivated by the store of value function of banknotes, for sav- ing purposes or as a precaution for uncertainties. See Hoarding. in response to financial sector uncertainty.
Internationally, cash has become a key target in the fight against terrorism. When there is actionable intelligence on where terrorists keep their cash, the military can strike and destroy those locations and put a significant dent in the terror groups’ ability to operate.
For example, in January, the United States military bombed a building that served as an Islamic State group “cash collection and distribution point” in Mosul, Iraq. By destroying a large amount of cash, described by authorities as tens of millions of dollars in banknotes, it put a severe dent into the Islamic State group’s ability to operate like a state. The U.S. pledged to continue targeting such stores of bills. Had the money been in a bank account somewhere, our government would be unable to reach it.
In Sweden, a country noted for spearheading the advent of a so-called cashless society, the central bank has recognized the importance of banknotes as a universal means of payment. The Riksbank is calling for banks to have a legal duty to ensure that cash remains widely available and accessible. As Bjorn Eriksson, a former director of Name of the International Criminal Police Organisation. It dates back to 1923. Its activity extends to all crimes of common law and especially those related to drug and gold trafficking, counterfeitin... More and the Swedish Police has put it, “Little has been said about the major challenges that a cashless society brings. It infringes on people’s privacy. It can make life difficult in sparsely populated areas. It can make a society vulnerable and increasingly open to sophisticated Internet crimes.”
Cash means security to so many, whether in a wallet or on a battlefield. But the attacks on banknotes are misguided and ignore the reasons why they are ubiquitous and necessary. When you add the personal, national and international security benefits to cash’s inherent other attributes, banknotes should be seen as the foundational payment instrument of the future, not just of the past.
By Guillaume Lepecq
This article first appeared at www.usnews.com on April 7 2016.