The cashless-society war intensifies: the record of 2015 and 2016, country by country
The prediction was that a global crisis would deliver a global cashless money. The crisis came in instalments; the cashless part came without one.
This page was begun in January 2016 and added to through the year, as a record of the movement against cash by governments and central banks. The frame it was written in was the one this section is named for: the belief that the downturn beginning in the autumn of 2015 would be severe enough to overcome public resistance to a cashless, centrally controlled money, in the way that crises overcome resistance to most things. The record is worth keeping separately from the frame, because the record turned out to be right and the frame did not.
The forecast behind it
In 1988 the Economist ran a cover predicting that within thirty years the rich world and much of the poor would be paying for its shopping in a single currency, which it called the phoenix, rising from the ashes of the national currencies. As 2018 approached the forecast did not look outlandish. Central banks had spent seven years fighting the Great Recession with money creation, and the results in early 2016 were commodity crashes, junk-bond crashes, eleven European stock markets in bear territory, the rouble at a record low, Brazil in its worst recession in a century, China’s currency unpegging from the dollar, and Italian banks, Monte dei Paschi first, being quietly emptied by their depositors as Greek and Cypriot banks had been. A global collapse of currencies would call for a global monetary solution, and the solution was already being built.
The record
China. The People’s Bank of China announced in January 2016 that it was targeting an early rollout of its own digital currency, with the stated aims of cutting the cost of cash and improving the state’s control of the money supply. The IMF’s managing director spoke in the same weeks about the opportunities of virtual currencies.
Sweden and Norway. Sweden was already the most cashless society on earth, with banks refusing to handle notes and churches taking collections by card; its central bank was studying a digital krona. Norway’s largest bank called in January 2016 for cash to be abolished outright, on the grounds that most of it was used for crime.
India. On 8 November 2016 the government withdrew the 500 and 1,000 rupee notes with four hours’ notice, removing 86 per cent of the currency in circulation, officially to catch tax evaders and counterfeiters. The queues lasted weeks, the economy slowed, and the government presented the result as a leap toward digital payment, offering incentives for card and mobile transactions. The United States had launched a programme with India the month before, named Catalyst, to help it become a digital economy.
Canada and Australia. Mastercard was described in Canada’s financial press as at war, not with Visa but with cash. Australia’s push to a cashless society, with a government review of the hundred-dollar note and a large bank going card-only in branches, went, in this page’s word, nuclear in November 2016.
The press. Bloomberg’s editorial board argued in January 2016 that governments should move now to abolish cash; the Financial Times had made the same case; a British high street trialled a cashless day; Harvard economists were publishing books on the curse of cash. The argument in each case was the same: cash enables crime and tax evasion, and it is the one thing that prevents a central bank from taking interest rates as far below zero as it likes.
What the record showed
The frame said a global crash would force the cashless society on an unwilling public. The record showed something less dramatic and more durable: the cashless society did not need a crash. It advanced in prosperous Sweden and in crisis-hit India alike, by convenience in one and by decree in the other, and the editorial boards cheered it in both. The war on cash was not waiting for the Epocalypse. It was already won in the places where it mattered, and the crisis, when parts of it came, merely accelerated what was under way.
Later note. Sweden’s central bank concluded its e-krona pilot in 2023 without launching; the country instead legislated to protect cash access. India’s demonetisation was later found by its own central bank to have returned 99 per cent of the withdrawn notes, which is to say it caught almost nothing. China’s e-CNY launched in pilot in 2020. The phoenix did not rise by 2018, or since.