Amid India’s sudden currency reforms, cash is facing a global crackdown as governments move to take control over transactions and the paper in the pockets of citizens.
While turmoil continues on the Indian subcontinent after Prime Minister Modi withdrew the two largest rupee notes on Nov. 8, elsewhere other countries are following suit - for very different reasons.
Less cash ‘good for banks’
Across the Indian ocean, Australian banks are calling for the scrapping of the dollar’s (AUD) highest-denominated cash notes, and even the removal of cash altogether.
In a report issued last week, investment bank UBS made the case for scrapping AU$100 and AU$50 bills, which account for 92 percent of circulating AUD by value. It presented data showing year-on-year drops in ATM usage compared with mounting credit card transaction numbers.
The report states:
“We believe removing large denomination notes in Australia would be good for the economy and good for the banks.”
Meanwhile, Citibank’s operations in Australia are set to lead the cashless trend with the bank announcing that some of its branches will no longer handle cash at all.
Janine Copelin, Citi’s head of retail banking, says:
“This move to cashless branches reflects Citi's commitment to digital banking and we are investing in the channels our customers prefer to use."
A survey by local bank Westpac in September further highlighted what is apparently a public inclination to eradicate cash transactions. It found that: “79 percent of Australians agree that a cashless society makes total sense.”
Clutching at straws?
Criticism of cash retirement is often heard within disruptive technology circles; banks reeling in paper means more control over costs and money supply, as well as greater surveillance of citizens’ transactions.
At the same time, reducing cash is considered an almost impossible task in economies such as India, where the vast majority of the population is unbanked and relies on cash or perhaps, in the future, mobile-based Bitcoin microtransactions.
As another case in point, Venezuela’s decision this week to limit ATM withdrawals to the equivalent of just $5, highlights the desperate attempts of government to control the uncontrollable.
Like India, the country’s economic woes have caused a spike in Bitcoin interest, with exchange rates showing consumers ready to purchase at a premium. Local news resource Diario Bitcoin notes that the rate on Venezuelan exchange, SurBitcoin, is hovering around $875 - over 15 percent higher than average market rates.