China’s Predatory Lending
February 12, 2025
In the previous article, we have already studied about option pools. We now know the various advantages that they offer and why they are preferred by startup companies as a means to compensate their employees. However, some companies and investors are not happy with the concept of stock option pools. This is because they dilute […]
Infrastructure funding can be very important for any economy. This is the reason that governments all over the world want to continuously upgrade their infrastructure. Even a country like America which is one of the most developed nations in the world has been planning to spend $3 trillion on upgrading its infrastructure. Just like America, […]
The role of commercial banks is to act as trusted partners to their corporate associates. Over the years, the degree of trust has been steadily increasing. As a result, many corporations across the world are outsourcing critical parts of their business to banks. In the previous articles, we have already seen how certain payment functions […]
Millions of well-intentioned people around the world try to save and invest money every month but fail. They are consistently unable to hit their financial goals and their savings targets. As a result, they give up and decide to continue living a financially undisciplined life. Financial planners have observed many such cases and then they […]
Due to increasing globalization in the world economy, a lot of multinational corporations today have their businesses spread out across several geographies. This creates several management problems for multinational companies. Not only do they have to struggle with the complexity of managing personnel and operations in many countries but they also have to ensure proper […]
Our monetary system has undergone a sea of change in the past century. If our great grandfathers were to see our lives today, they would not be able to relate to any form of payment. Fiat currency, plastic money, negotiable instruments are all creations of the financial innovation that has taken the world by storm in the past century. Although there is widespread skepticism about the fact that fiat currency has historically always declined to zero in value, it is currently in use all over the world.
However, if critics are to be believed, this innovation might be going too far. There have been some experts that have suggested that the government must adopt a drastic change in the way that we handle our finances. This drastic change is outlawing the use of cash! It may seem bizarre but many countries are already implementing these rules in a big way. If these rules do get implemented, for the first time in monetary history, we may have a society which doesn’t use cash!
Glimpses of what that would look like are already being seen in some countries.
In this article, we will discuss the pros and cons of living in a cashless society.
Financial innovation has caused a gradual reduction in the amount of cash in circulation. Less than 10% of the money supply today exists in the form of cash and bills. Majority of the money supply is in the form of digital currency. The cash that exists today is only to grease the wheels of commerce. Many believe that a demand to eliminate this balance 10% is simply absurd and bordering on infringement of privacy.
The government believes that removing this cash will have many beneficial consequences, the most obvious being reduction in crime. Cash is the fuel that powers criminal machinery. If the government can track all payments, crime would be reduced drastically. Drug dealers, weapon salesman, gambling syndicates etc all conduct their business because of cash. In the absence of cash, operating these criminal enterprises would be next to impossible.
The government also believes that a lot of other benefits will accrue as a result of implementation of this policy. The pros and cons analysis is as follows:
The benefits of living in a cashless society are as follows:
Therefore even though humanity is on the verge of adopting a cashless system, many questions remain unanswered. How will the system deal with the possible misuses and threats that this system may impose is yet to be seen.
Your email address will not be published. Required fields are marked *