Things Just Got Serious in Europe’s War on Cash

Jerri-Lynn here: Part of the reason I’m posting this is because it dovetails nicely with scroll.in’s three-part series on India’s demonetisation debacle and the war on cash, featured in today’s Links.  Those will be posted at the usual time.

By Don Quijones, of Spain & Mexico, editor at Wolf Street. Originally published at Wolf Street

“To protect citizens from threats as defined by apparatchiks in Brussels.”

The central authorities in Europe just launched their most important offensive to date in their multiyear War on Cash. The new move comes directly from the European Union’s executive branch, the European Commission, which just announced its intention to “explore the relevance of potential upper limits to cash payments,” with a view to implementing cross-regional measures in 2018.

Maximum limits on cash transactions already exist in most European countries, and the general trend is downward. Last year, Spain joined France in placing a €1,000 maximum on cash payments. Greece went one better, dropping its cap for cash transactions from €1,500 to €500. In simple terms, any legal purchase of a good or service over €500 will need to be done with plastic or mobile money.

In some countries, the maximum cash limit is significantly higher. For example, in Europe’s biggest economy, Germany, recent attempts by the government to set a threshold of €5,000 triggered a fierce public backlash. The German tabloid Bild published a scathing open letter titled “Hands Off Our Cash,” while a broad spectrum of political parties condemned the proposed measures as an attack on data protection and privacy.

“Cash allows us to remain anonymous during day-to-day transactions. In a constitutional democracy, that is a freedom that has to be defended,” tweeted the Green MP Konstantin von Notz. Even Bunderbank President Jens Weidmann criticized the government’s proposals, telling Bild (emphasis added): “It would be fatal if citizens got the impression that cash is being gradually taken away from them.”

Germany’s neighbor to the south, Austria, has similar reservations about the EU’s plans to suppress cash. The Deputy Economy Minister Harald Mahrer said that Austrians should have the constitutional right to protect their privacy. “We don’t want someone to be able to track digitally what we buy, eat and drink, what books we read and what movies we watch,” Mahrer said on Austrian public radio station Oe1. “We will fight everywhere against rules” including caps on cash purchases, he said.

In other words, any attempt by the European Commission to set a mandatory continent-wide limit is likely to be met with fierce resistance — at least from some countries. Others are already so far down the path toward a cashless society that they’ll barely notice the difference.

The financial consultancy AT Kearney predicts that by 2022 there will be more cashless transactions in Europe than those using cash. According to a report by Fung Global Retail & Technology, nine of the top 15 “most digital-ready” countries are in Europe. Sweden is hotly tipped to become the world’s first completely cashless economy. It could happen as soon as 2030.

Yet even Sweden has seen an enthusiasm gap emerge, mostly along demographic lines, as the Guardian reports:

Older people in the rural north, tending to be the least tech-savvy, resent the economic power of Stockholm and Gothenburg, now almost entirely cash-free urban zones. The National Pensioners Organisation is a key player in the “Cash Uprising” coalition now campaigning to make sure older Swedes can still deposit and remove cash from banks.

Some experts fear the emergence of a dystopic “two-tier urban realm” in which the poorest become cut off from mainstream commercial life by their continued dependence on traditional forms of currency and are only able to trade among themselves. As financial writer Dominic Frisby explains, “the beauty of cash is that it’s a direct and simple transaction between all kinds of different people, no matter how rich or poor.”

What’s more, there’s no middleman involved. One party pays the other party in mutually accepted currency and not a single middleman gets to wet his beak. And to all intents and purposes, it’s untraceable. Is it any wonder that banks, fin tech firms, credit card companies, central banks, national and regional governments and UN agencies want to pull the plug on physical currency?

They already have vital technological and generational trends firmly on their side, as a result of which cash’s days as a commonly used payment method may well be numbered anyway. They also have the added bonus of widespread public ignorance, apathy, and disinterest. But they still want to hurry the process along, primarily by introducing incremental legislation that makes it harder and harder for law-abiding citizens to pay with cash.

For now, the pretext most often wheeled out for this escalating assault on physical currency is the War on Terror, but there are also the familiar bugbears like organized crime, tax evasion and the informal economy.

These justifications merely serve to obscure the real ultimate goal: the complete — or near-complete — technocratic control over the money supply. In a world where every transaction must be electronic (i.e. traceable) and where biometric authentication systems have become the norm, the influence of big banks, corporations, tech firms and governments over our lives will be virtually unlimited.

Another important perk of cash is that it limits central banks’ ability to continue conducting arguably the greatest financial heist of the modern age, i.e., negative interest rate policy (NIRP). As long as cash exists, there’s no way of preventing depositors from doing the logical thing – i.e. taking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it.

But perhaps the greatest beauty of cash is that it is one of the last remaining things that gives people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives. However, according to the European Commission, privacy and anonymity do not constitute “fundamental” human rights:

…prevent(ing) the anonymity that cash payments allow might be viewed as an infringement of the right to privacy enshrined in Article 7 of the EU Charter of Fundamental Rights. However, as complemented by article 52 of the Charter, limitations may be made subject to the principle of proportionality if they are necessary and genuinely meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of others.

In other words, to protect European citizens from any threats to general interest identified by the apparatchiks in Brussels, the European Commission can quite simply override the non-fundamental rights of over 500 million people to privacy, anonymity and personal freedom. And it’s all set to begin in the next year. By Don Quijones, Raging Bull-Shit.

The UK, whose people have voted to escape this Union, has other ideas. “What they sell is escape: from the laws, rules, and taxes of jurisdictions elsewhere, with secrecy as their prime offering.” World’s Worst Tax Haven Threatens to Expand its Operations

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45 comments

  1. WheresOurTeddy

    Keep stacking the three elements: Au, Ag, Pb

    Attain and maintain proficiency with your Pb delivery mechanism.

    Know your neighbors.

    1. ambrit

      My oh my. Now I get the joke I heard recently at a gun show; “What’re the two favourite soft drinks at the Survivalist Cafe? Doctor Prepper and Mr. Pb.” So bad, and yet…

  2. homeroid

    I cannot eat metals. Cashless society is more complex and a waste of time.

    Stand in line behind someone with a chip card.
    Grow food if you can. Help your neighbors as you can. That is money.

    1. polecat

      So what happens when your ‘neighbors’ are beyond help … e.i. … ‘they’re just not into you’ ??? … shoot first ?

  3. Charles 2

    The whole article, and most epidermic reactions against electronic money, are based on the premise that electronic money and anonymity are not compatible. This is simply not true !

    The TALER project theoretically and practically demonstrates that electronic money can be anonymous (I.e. Buyers and sellers don’t need to know each other’s identity) and yet accountable for the purpose of tax base computation (I.e. The tax man can know how much a seller sells).

    There is currently an assault on privacy under the disguise of enforcing tax laws. It is important that everybody understands that the two problems can be separated.

    1. Tinky

      Well shucks, Charles, that’s just dandy!

      So…we will be able to protect ourselves from the big bad vendors through anonymity, but happily allow the benevolent Government to see (and tax) all.

      Hoo boy.

      1. Charles 2

        In case you forgot it, it is precisely because the benevolent Government is taxing that paper money has value. You can’t have one without the other.
        Taxes on consumption are much more efficient economically than taxes on income. Their only shortcoming is their lack of progressively. Electronic money could change that and allow GST/VAT to be progressive.

        1. Tinky

          Sounds good in theory, but hopelessly naïve when it comes to practice.

          TPTB would choose to develop fair, progressive taxation, if only they could observe and extract taxes from every single transaction?

          Good luck with that.

          This is about control and fee extraction, not some idyllic drive towards equality.

    2. TomDority

      The issue of hacking can be resolved ( but it is not) by appropriate encryption technology but, the power of cowardly politicians and those making the loot $$$ based on peddling fear are too afraid to allow that to happen – because ‘only people involved in illegal activity would need powerful encryption’.

      This cashless society shtick is simply another appeal by the true criminals to use fear as a motivator to trade in freedoms.
      Was it Ben Franklin who said something along the lines… “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”

      1. inhibi

        Every encryption can be broken. Please remember that next time you think that technology is going to shield you from any sort of illegal activity.

        In fact, even encryptions that companies spend millions of dollars developing can be broken in a few days. If you ever visit a Hackathon contest, you will see what I mean.

        Also, cashless forces people to go digital which gives even more incentive for hackers. Everyone’s identity is online now as well, so linking people & their addresses, phone numbers, etc has never been easier.

    3. Clive

      I don’t get the point of this “solution”. If you enter a transaction with another party, why wouldn’t you want to know who they are? And why wouldn’t you want them to know who you are? And while on occasions you might want the option to not advise a government of every single transaction you undertake why would you want to automatically inform them by default?

      Furthermore if you want to execute transactions in a different currency than that which you hold, you simply have to have a counter party and that counter party needs capital. The TALER project is, erm, rather vague on that point.

      1. Charles 2

        I think there is a confusion with the meaning of “who”. In the case of TALER “who” is a cryptographic signature, anything beyond that is optional.
        The buyer would know that a seller is registered with a TALER exchange, which can know if a seller is affiliated to it, exactly in the same way that today you can check who your brick and mortar seller is by searching its company identification number. Only the information that is required to be publicly disclosed by law would be disclosed to the buyers.
        The seller doesn’t reveal anything, meaning (s)he is the only one that can relate its cryptographically signed receipt (that can include a contract) to its identity. It can choose to do so (for instance to bring a complaint to a court against the seller or have an item delivered to its physical address) or not (to stay anonymous).

        Tools are never ideologically neutral. Regarding the role of government, the TALER acronym stands for Taxable Anonymous Libre Electronic Reserve, so the systematic communication of sales to Sovereign Authorities is a feature, not a bug ! It serves first for the purpose of GST/VAT computation, second to track transfer of funds between individuals. There are many jurisdictions where it is the commonly accepted social norm to be accountable in some way for all transfer of funds/wealth. TALER just offers a better way to choose the type of information that is disclosed.

        As per the last remark, I don’t really understand it. The TALER infrastructure relies explicitly on counter parties, which are called “Exchanges” in the project terminology, whether it is for a cross border transaction or not. From the documentation, it is quite obvious that Exchanges should be “100% reserve” Financial Institutions, I.e. hold as much reserves with the Central Bank that what they issue in electronic wallet. Furthermore, as any financial institution, Exchanges would have to hold capital for operational risk (fraud, bugs, etc…).

        1. Clive

          Baloney. TALER would have to cave to a court production order if either the buyer or the seller was being investigated by law enforcement. If either the buyer or the seller had provided them with information, that information must be provided in response to a warrant or an employee of TALER must give it in evidence while under oath in court.

          These ridiculous ideas that a perfectly ordinary, standard legal entity like a company (which TALER is, it doesn’t get special rights just because it sends out press releases mentioning crypto-this or Blockchain-that) is somehow exempt from legal process is tantamount to being a scam in my option.

          Yes, TALER’s own Mickey Mouse currency is 100% reserve but sooner or later you will need to convert it into real, grown-up currencies. At that point you will need to either transfer funds (dollars, euros, whatever) into TALER’s ledger and TALER will become a deposit taker which entails creating a capital structure within TALER (please do consider taking a basic accountancy course at you local community college for a few weeks to understand this fundamental aspect of how banking works) or else you will need to interface with another entity willing to trade in TALER “currency” which will present you with a counterparty risk.

          If you play risk “pass the parcel” as you explain above, sooner or later you present someone, somewhere with a requirement to hold capital. If you’re letting TALER off that hook, please tell me where, exactly, you are going to hang it?

          1. Charles 2

            Please Clive,

            I understand that you view yourself as an expert in the current infrastructure of digital payment, but you really should take a bit of time to study the TALER protocol before calling it “Baloney”. Blind Signature and Anonymous electronic money are possible. You can find a seminal paper here and a more detailed description of the protocol by its creator here.
            Furthermore, the TALER scheme is endorsed by Richard Stallman, of emacs and gcc fame, we are not talking about crackpots here…

            To answer your remark specifically , the TALER exchanges DON’T KNOW to whom the buyer has bought, so they cannot produce that information to a court, even if subpoenated. The information is encrypted with a key ONLY possessed by the buyer. The Court can only subpoena the buyer if it wants the information (just as today with paper cash where the court can ask for receipt to explain use of cash holdings). This is similar to zero-knowledge protocol such as open whispers’ SIGNAL messaging app or Boxcryptor’s eponymous cloud encryption infrastructure.

            You also should take the time to read my comments fully. I explicitly said

            Exchanges must be FINANCIAL INSTITUTIONS

            I didn’t use these words lightly, a Financial Institution is regulated by a financial regulator and must hold capital. I never wrote the contrary. Actually I even wrote that they needed to hold capital for operational risk.

            BTW, I am a seasoned bank exec. I spent the first years of my career auditing bank departments including IT and branches and I had the chance to be trained by senior colleagues who knew their business : there were not many commercial bankers at the beginning of the 90’s who understood enough bank balance sheet to teach that Banks, not The Central Bank, created money and that money multiplier theory was nonsense. I am not sure community colleges even today teach that. So thank you very much for your suggestion, but I will pass…

    4. Lord Koos

      It’s not only about anonymity — it’s also about parasitic middlemen being able to take profit on every transaction.

      1. Charles 2

        Every infrastructure needs to be built, maintained and operated by someone, so one must be cautious before asserting that a middleman is “parasitic”. At least TALER has an open source IT infrastructure, so it cannot be used to enforce monopoly pricing as Visa, Mastercard or PayPal do. It doesn’t mean however that there are no barrier to entry : Exchanges need to be regulated as Financial Institutions, and compliance doesn’t come for free.
        As for the apparent “zero transaction cost” of paper cash, it is an illusion. Banks routinely charge for cash handling operations and if they don’t, that cost is included somewhere in the pricing of banking services. Even if the Central Bank and/or a Post Office Bank were providing the cash handling service for free to everyone, all the associated costs would come to reduce the profit that CB and PO remit to the Treasury.

    5. Waldenpond

      But they aren’t. The US system has additional faults….. We don’t use debt. We had three family members have resource spike events at one time (1 moved out!) … and had saved for each of these events. Take the ol’ checkbook to buy the necessaries for these tasks…. and the checking account is locked for unusual activity. Call the local credit union, there’s nothing they can do, it’s automatic, complain to the credit agency. Call the credit agency, there’s nothing they can do, it’s automatic, complain to the local credit union.

      Checks are processed immediately and returned to the user. It’s an electronic transfer. Not only is my activity stalked, I’m routinely punished for not using debt.

  4. Alex

    My view from Stockholm is that the “cashless society” has grown here without widespread opposition because of a general trust (perhaps naive) in institutions and government. The tax office, for example, consistently gets the highest approval rating for service out of any agency. The government also does its best to promote new technology – the fiber network in Stockholm was built by the city, and operators lease capacity.

    1. Moneta

      Trust in our currencies will be in jeopardy when it will be felt like cashless trades are forced and not a choice.

  5. LT

    Corporations can not be trusted.
    I don’t say governments. Thay are in service of the corporations so we need to stop lying to ourselves that the “gubment” is responsible for this.

  6. David

    Up to a point the concern is justified. But it’s worth stressing that it may vie defensible in certain limited cases. For example, shops in a number of European countries now refuse to take €500 notes. This is because drug wholesalers (not the dealers you find on street corners) who work in thousands and tens of thousands of Euros per transaction, and necessarily in cash, have historically used high-value notes, and washing drug money by buying groceries or petrol, for example, is quite effective. In addition, the flip-side of anonymity is un-traceability if you are robbed, and I’ve noticed that ATMs in European airports now offer very large denomination notes (€100 is often the smallest you can get) and of course robberies are common in Paris and other European tourist centers. For the same reason, most shops in France now refuse to take cheques, or demand at least one form of photo identification. Abolishing cash entirely would be tough though, given the number of markets in France and the fact that the majority of the merchants (a notably bloody-minded group) don’t and won’t take credit cards.

    1. Charles 2

      Abolishing cash entirely would be tough though, given the number of markets in France and the fact that the majority of the merchants (a notably bloody-minded group) don’t and won’t take credit cards.

      The TALER Project comes from France. Assuaging those bloody-minded merchants is probably part of the motivation.

    2. Charles 2

      Also, anti-money laundering laws are the least of the worries of shopkeepers. In the order of importance :
      1) shopkeepers want to minimise the circulating capital locked in their cash register machine. If you get many €500 notes from your customers buying €20 of groceries, you need a lot of € to give back the change.
      2) lots of cash in the cash register machine is an invitation to robbery.
      3) shopkeepers are on the hook if the banknotes are fake. With high denominations, this risk is higher. Considering the very low velocity of €500 denomination, the fact that there are only 5000 denominations that are withdrawn every year due to counterfeiting is not necessarily reassuring for vendors.

      1. David

        Agree all that. In effect, lots of shops are happy to take cash (and in markets it’s often hard to pay with a card) but the amounts are generally small. Flash even a €100 note in certain contexts and people will start to get nervous. There’s also the fact that, in France as elsewhere, small amounts of cash change hands regularly for services rendered, even down to tips left at restaurants, and that’s just how the society works And as a French friend mentioned the other day, this whole initiative could be seen as a dastardly plan to get beggars and informal tradespeople off the street – how many refugees have electronic payment facilities?

  7. TomDority

    Computer hacking, identity theft, power outages, philshing, simple scams, fee racking….oh yeah..no more bank runs due to fraudulent activities at the banks.
    I seem to remember that there is a push to roll back laws regarding fraud, liability and doing away with that pesky fiduciary duty.
    I guess the powers that be want to grab everything under the disguises of fear and, them cowards are out to protect us smirfs.

    1. Jim Haygood

      ‘no more bank runs due to fraudulent activities at the banks’

      This is a critical point. With only e-currency held in bank accounts, commercial banks think they can operate with the same exorbitant privilege as the Federal Reserve. That is, immune from runs since their liabilities (deposits) can’t be redeemed into bearer form.

      There’s bound to be a flaw in their reasoning. One flaw is that international transfers would have to be suspended to stop big depositors moving their funds out of reach of the hermetically-sealed domestic e-banking system.

      As for implementation, consider the ridiculous “bill pay” option offered by most US banks. You enter your payee and amount electronically. Then the bank mails a paper check to the recipient. One is surprised only that it’s not delivered on horseback.

      It would take fifty years for the retarded clowns who run the US banking system to organize a cashless society. Fedwire and ACH don’t come anywhere close to serving as convenient, universal electronic payments.

  8. Disturbed Voter

    Europeans should just accept that they are part of USSR 2.0. With monarchial Disneyland. This is why my ancestors left that mess. Please don’t bring it to the US, we are armed, you are not.

    1. JTMcPhee

      As I recall, the USSR, though racked with oppression and corruption and “inefficiencies,” was a cash-based set of economic mechanisms. For all the misery the Communist Party mafia created and imposed, at least the black market/grey market flourished in a cash (and kind) environment. Not to say that if the kinds of creatures that create “authoritarian” structures (then, and currently of course, they are the same kind of people) and manage the looting had not had the level of technological control and vulnerability in place back then, they would not have “managed” and “central-planned” the money flow the way the Banksters and kleptocrats of today are aiming to do.

      I can’t find (probably because I don’t know how to ask the question in DDGo correctly) what must surely exist — the documentation by the banksters and central-bankers of what their plans actually are, in so many words. The Imperial military’s grand visions of ruling everything as the climate collapses and everything goes haywire are pretty easy to tease out — but not the stuff that surely must exist where these Fuggers who plan to own everything talk among themselves about this part of the Plan 7 from the 11th Dimension.

      I did run across lots of reporting, including a lot of articles TOUTING the great “virtues” of bank-mediated no-cash-allowed transactions. So I also happened across this page from BoA’s “here’s how we screw serve you” notices to customers, telling them, if they get around to reading the fine print, what access to their money (their portable wealth?) costs them: “Fees Associated With Small Business Accounts,” https://www.bankofamerica.com/smallbusiness/resources/fees-at-a-glance.go

      As Jackie Gleason used to say after his monologue at the start of every show, “And Awaaaay We Go!” https://m.youtube.com/watch?v=qwnyIOoL-LM

  9. Paul Wyndale

    Sold our car in Switzerland in 2012 for 18 x 1000 CHF bills. Walked to the bank and deposited it, no questions asked. That’s Freedom!

  10. PKMKII

    For now, the pretext most often wheeled out for this escalating assault on physical currency is the War on Terror

    Ironic, given that ISIS’ preferred method for moving currency around is bitcoin.

  11. River

    I’ll start printing the New Yen….

    His total assets were quickly converted to New Yen, a fat sheaf of the old paper currency that circulated endlessly through the closed circuit of the world’s black markets like the seashells of the Trobriand islanders. It was difficult to transact legitimate business with cash in the Sprawl; in Japan, it was already illegal.

    William Gibson, Neuromancer

  12. Alex

    One observation/thought regarding anonymity of paper money – bills still have serial numbers, so it could in theory still be traced to some degree if optical scanning equipment were required at choke points and payment terminals. This could be correlated to facial recognition. We’re of course a long way from this being implemented, but all the technology and computing power is now trivial to integrate.

  13. TheCatSaid

    Mentioned in part 3 of the scroll.in 3-article series on this topic, mentioned above, among 5 reasons why TPTB are pushing cash-less systems:

    3. As individuals and businesses make digital payments, they create a data trail of their receipts and expenditures. This enables financial service providers to assess their credit risk better and provide credit where credit wouldn’t have been provided earlier.

    This is even more nefarious than it seems–and even more nefarious than most company/government staff members realize.

    In his ongoing YouTube video series, George Webb documents the spread of cell phones in poor countries. What is of concern is that they are coming pre-loaded with a MicroLoan app. These have high interest rates–as high as 195%. Far from helping indigent women buy sewing machines to help their family and to get out of debt, the reverse occurs: odious debt which cannot be repaid. The result–more sweatshop labor, adults selling their kidneys to pay the interest on their loan, and child trafficking.

    In Haiti, Denis O’Brien / DigiCel is a key player.
    In Latin America, it’s Carlos Slim and his cell phone empire.

    The transition from cell phones to “MicroShark” loans to organ trafficking has been established by a number of investigative journalists. Webb is connecting the dots to how this has occurred as part of geopolitical strategy. In a recent episode he observes that arranging a good quality donor heart and avoiding waiting list time is a great way to ensure generous political contributions.

    The push to cashless transactions involves more than meets the eye.

    1. TheCatSaid

      Link to the George Webb video series here.

      New material is added daily in small increments. This allows one to gradually integrate new information. The series has extensive documentation.

      The modus operandi has been used repeatedly. The Iran/Contra affair was a relatively simple example, involving drugs, arms and money. The cell phone / organ harvesting component is relatively recent (cell phones + microloan industry).

  14. RBHoughton

    This has been the British position for centuries. UK fought two wars against the democratic infection in France and America to entrench its system on the world and after 20+ years of war, we prevailed.

    France and America were brought into line and everyone cooperated on the same ideological basis which is that on coming into society, man surrenders some of his natural rights in order to preserve the rest from the abuse of other men.

    It was the defeat of democracy and republicanism that bestowed British representative democracy on our species; the defeat of Tom Paine and the Constitution.

  15. The Rev Kev

    Can you imagine what it would be like in a cashless society? If you government did not like you, in the old days they would have the taxation office pull audits on you. With digital currency, they could cancel your account. Bam! No way to buy food and fuel, no way to pay bills, no way to receive any payments, wages or salary. How long can a person go in a modern society go without money to function?
    The government wouldn’t have to even get their hands messy by doing so but would outsource this sort of caper to corporations which of course are only answerable to themselves. As an minor example of this at work, Apple is yanking Iranian apps off their store. If the US government did this there might be a legal challenge but as a private corporation is doing it, meh!

  16. Ultrawoman

    What drives me nuts about credit/debit cards is every so often they are declined even if there’s more than adequate credit for the purchase. The good thing about cash is it is never declined. It’s always good. I do not enjoy coming home and having to call the card issuer to find out what’s going on with the card.

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