OK, do we need a "real" currency?

Irish Steve

This is controversial, but with everything else apparently on the table, why not:D

Do we need a real currency, or with the size of the state, and both of the big banks effectively in state ownership, are we at the point where an electronic currency would be a viable option.

Many transactions are now electronic, what would the effect be if they were all electronic, and cash as such was no longer used.

Tourists would need to have electronic cards, but as the vast majority have a card of some form already, that's manageable.

As for the rest of us, what would it mean?

The end to bank raids, we would no longer need bank counters as such, and most of the bank branches would be less important. Is that such a bad thing? Maybe not, the state would lose the money on bank profits, but given the size of their recent losses, I do wonder about the nett value, and if the overall cost of doing business was reduced, that has to be a plus in harsh competitive times.

The end to cash in transit raids, for the same reason.

Kidnapping bank officials etc would be pretty pointless. Mugging pub landlords at 3 am would become a waste of time.

There would be no cash dispensers to drag out of bank walls with JCB's

No more queuing to get cash in or out of banks.

Drug dealing would be pretty much impossible, the dealers would have no way to recycle their payment.

The Black economy would be in big trouble, if there's no cash, there's no way to hide it, and things like parts for repairs still have to be bought.

Money laundering would be hard to do

Brown envelopes to politicians (or others) would be pretty pointless, there'd be nothing to put in them.

OK, barter might become possible, but it would be goods for goods. That might not be such a bad thing, at least there would be real value involved.

if it was also then made difficult to lodge "foreign" currency above a certain value unless a business was registered to the holder, the whole aspect of tax avoidance and the like becomes a lot simpler.

Social welfare fraud becomes much easier to detect.

Fraud or other dishonest operation within companies becomes easier to detect.

Things like diesel laundering should be much simpler to track down and stop, someone buying large quantities of agri diesel has to have a business to use it or sell it, and the money trail is a lot simpler to trace.

If all imports of parcels have to have a recipient ID on them, illegal or dangerous drugs and the like from questionable sources are stopped.

What are the downsides? Big brother would have to be kept in his cage, to prevent inappropriate access to personal information.

Politicians would have to be controlled as to the level of access they can get to patterns of spending.

We'd need a very much better broadband network to cover the country so that all businesses could have a reliable electronic transaction processing service, but that might not be such a bad thing.

Most crime would become pretty pointless, if the things stolen can't be sold, even for a fraction of their value, without the transaction being processed, that has to be a useful deterrent.

Cowboy traders would be much easier to track down. The "clean your gutters", and then charge €500 for a €50 job. Not much point if you can be tracked down electronically.

Burying a bit of cash for the retirement fund would be no longer possible, which might upset some people. but if the PAYE sector could see that the self employed sector was (forced to be ) honest, maybe some of the complaints would stop.

Right now, I can't see any serious disadvantages? Are there any that are showstoppers? I don't think so, and most of the above look like good things to me.

I'll just go outside and see if I've got anything that can be used as armour plating.

Steve

Finnbar01

The type of system you propose, would lead to nothing short of a totalitarian state.

May as well just tattoo a barcode on the wrists of everyone while you're at it.

Tigger

people would uise dollars or something for the underhand stuff

professore

The Black economy would be in big trouble, if there's no cash, there's no way to hide it, and things like parts for repairs still have to be bought.

There's your problem - our country would have it's budget balanced and in surplus instantly with all the extra cash flooding into the country's coffers. You couldn't have that.

Irish Steve

Deleted User wrote: »

May as well just tattoo a barcode on the wrists of everyone while you're at it.

Harsh reality, we're not that far off being there now, if you look closely at how the existing systems work.

Your mobile phone calls can all be tracked to who you called, when and where you were in the country at the time. The vast number of electronic transactions are all trackable now, without any changes, and there's only cash left to worry about.

Everyone will have a PRSI card before long, and won't access state systems without it, banks actually would be happier without customers in branches, they'd be much happier if everything was done on line, and where would we be without the Internet, and tracking what we do, where we go, etc is already a lot simpler than a lot of people would be completely comfortable with if they really looked at it. CCTV, number plate trackers, M50 Tolls, all trackable now.

All of that is without the sort of things that are done by places like CGHQ in the UK, and by the CIA, et al. How do you think some of the terrorist activities are tracked now.

What no cash does is get rid of the "value" of undetectable activities, and given that there are massive numbers that are also illegal, would that be so bad?

Steve

Geuze

A cashless economy is a good idea.

Much less crime.

Much less tax evasion.

Lower cash handling costs for banks and retailers.

(NB: bank profits would not fall, IMO)

Smaller shadow economy.

Inbound tourism could be an issue.

Geuze

Irish Steve,

all good points, very comprehensive post. I agree.

Fromthetrees

1. NO PRIVACY.
2. BANKS WILL BE VERY POWERFUL. (look what has happened already)
3. IDENTIFICATION THEFT.

4. If you lose your card it takes time to get a new one. (how do you live?)
5. Impractical as it can break easily.
6. Who actually controls societies money? Where does control of it stop? (is banning alcoholics from buying drink the next logical step?)
7. Surcharge/interest charge on every single transaction of goods and services.
8. Impractical if you move to overseas.
9. Impractical for tourism.
10. Cards become expired and then you have to buy/get a new one which can take time. (how do you live?)
11. Might forget your pin.
12. You might spend money that you need for something else without realising it.
13. People spend more when they have a card compared to cash, http://www.livescience.com/2849-study-credit-cards-spending.html
14. Without cash there would be no instant payments for goods and services.
14. You lose having the liberty that cash gives a person.
15. It's very easy to lose a card.
16. Our government can't be trusted with running a piss up in a brewery let alone having complete control over everyone's money.
Are there enough reasons here not to have a cashless society?

Finnbar01

Fromthetrees wrote: »

1. NO PRIVACY.
2. BANKS WILL BE VERY POWERFUL. (look what has happened already)
3. IDENTIFICATION THEFT.

4. If you lose your card it takes time to get a new one. (how do you live?)
5. Impractical as it can break easily.
6. Who actually controls societies money? Where does control of it stop? (is banning alcoholics from buying drink the next logical step?)
7. Surcharge/interest charge on every single transaction of goods and services.
8. Impractical if you move to overseas.
9. Impractical for tourism.
10. Cards become expired and then you have to buy/get a new one which can take time. (how do you live?)
11. Might forget your pin.
12. You might spend money that you need for something else without realising it.
13. People spend more when they have a card compared to cash, http://www.livescience.com/2849-study-credit-cards-spending.html
14. Without cash there would be no instant payments for goods and services.
14. You lose having the liberty that cash gives a person.
15. It's very easy to lose a card.
16. Our government can't be trusted with running a piss up in a brewery let alone having complete control over everyone's money.
Are there enough reasons here not to have a cashless society?

Excellent post and may I add:

17. The computer system to run this cashless society would be exposed to bugs, viruses and hackers.

frag420

What do you propose I use to snort my cocaine if there are no fiddy notes in circulation??

frAg

Geuze

Fromthetrees wrote: »

1. NO PRIVACY.
2. BANKS WILL BE VERY POWERFUL. (look what has happened already)
3. IDENTIFICATION THEFT.

4. If you lose your card it takes time to get a new one. (how do you live?)
5. Impractical as it can break easily.

You would have one or more debit cards, as now.

But you might also use stored-value disposable cards for small-value tx, with no PIN.

Example: you buy a 20-50 euro card from an ATM, use it up, throw it away, or reload it.

If lost/stolen, your loss is minimised.

6. Who actually controls societies money? Where does control of it stop? (is banning alcoholics from buying drink the next logical step?)

As now, the quantity of money is controlled / influenced by the CB.

7. Surcharge/interest charge on every single transaction of goods and services.

I pay no fees when I use my debit card.

8. Impractical if you move to overseas.
9. Impractical for tourism.

Tourism is an issue, yes.

10. Cards become expired and then you have to buy/get a new one which can take time. (how do you live?)
11. Might forget your pin.
12. You might spend money that you need for something else without realising it.
13. People spend more when they have a card compared to cash, http://www.livescience.com/2849-study-credit-cards-spending.html

Interesting point, good psychology. People need to be more disciplined. Would they learn to change behaviour?


14. Without cash there would be no instant payments for goods and services.

Payment systems can be made faster, paying shops overnight.

14. You lose having the liberty that cash gives a person.
15. It's very easy to lose a card.

It's easy to lose cash.

16. Our government can't be trusted with running a piss up in a brewery let alone having complete control over everyone's money.
Are there enough reasons here not to have a cashless society?

Thanks.

Irish Steve

Interesting that most of the replies are finding possible issues, but not many showstoppers that would make it impossible.

It would be a huge culture shock, so many aspects of crime would be stopped, and anything that reduces the control of the banking systems has to be so worth doing at this stage, seeing the mess they got us into.

Unfotunately, I doubt that we'd be able to find a politician with the courage to take up this idea and run with it, it's been clear from recent weeks that there's a distinct lack of real courage in the political arena,

It was worth a try,

Steve

Manach

Finnbar01 wrote: »

Excellent post and may I add:

17. The computer system to run this cashless society would be exposed to bugs, viruses and hackers.

I was completely against this closed society with its oversight over the small bit of cash that the government allows the "taxpayers" - till I noted point 17. IT types might very well prosper under that

Scofflaw

frag420 wrote: »

What do you propose I use to snort my cocaine if there are no fiddy notes in circulation??

frAg

...you won't be able to buy any. And personally, I don't consider a reduction in crime (temporary, while counterfeiting is set up) to be worth the permanent loss of privacy.

cordially,
Scofflaw

shannon_tek

im very sure the likes of paypal would grow in a society like this. after all they are preferred

SupaNova

Irish Steve wrote: »

Drug dealing would be pretty much impossible, the dealers would have no way to recycle their payment.

The Black economy would be in big trouble, if there's no cash, there's no way to hide it, and things like parts for repairs still have to be bought.

This is naive. And you completely gloss over why.

OK, barter might become possible, but it would be goods for goods.

Instead of a gang paying for drugs with cash, they can pay with guns, jewellary, gold, diamonds, collectibles, cars, electronics etc etc. If Hollywood movies are anything to go by, paying for guns with drugs or drugs with guns is common in our existing world of cash.

grizzly

I'm not too far off this myself now with online – Paypal etc and for small purchases I can put most on my laser card.

Ten years from now I'm sure I'll be making the majority of purchases with a smartphone this things I'd currently need coins for, like Luas/newspaper/pints.

goose2005

People would just use cigarettes or foreign currency.

Gonzor

Just had a quick glance at whats being mentioned already so forgive any repeats.

1) How do small buisnesses cope with this? Take the local corner shop. Or your local taxi driver? They now need to purchase hardware/computers or go out of business? How much is it going to cost the small business to get this setup.

2) It causes a lot of problems with giving money to other people. Your teenage daughter is going to the cinema and needs 30euro.... if you know in advance then you can transfer money to her card/account but what about when she tells ya at the very last minute.

3) It wont really stop criminals and people buying drugs. That 50euro I transferred to his account that day was because he washed my windows/sold me some playstation games etc.... And Im sure the bigger fish will similarly have their excuses lined up about poker games and donations and what have ya... though on the plus side we mightened be able to prove criminality but we could certainly look into taxing them.

4) What happens when there is a powercut at your local spar. Or if the internet (presuming this is all done online) goes down.

5) What happens when hackers start messing with the system.... no point in saying they wont even at least try. Because they will.

And then to top it all off, I cant see the people of Ireland agreeing to this. Too many people would have to much too lose, the small shops, worried criminals, politicians trying to hide papertrails or anybody thats in the "brown envelope game" in any way, shape or form.

Chuck Stone

Irish Steve wrote: »

What are the downsides? Big brother would have to be kept in his cage, to prevent inappropriate access to personal information.

Banks, governments and corporations would love that type of access to your personal details.

Also, an alternative hard currency would spring up very quickly imo.

Someone would just see a business opportunity and make coins with precious metal content that could be traded for your virtual credits.

If hard currency was outlawed it would just go underground.

Cookie_Monster

Interestingly I've found new zealand far more towards your ideal than home. The eftpos cards are accepted everywhere and I have not carried cash in months because of it.

Not near total removal of cash by any means I reckon, but a lot closer than ireland is.

Irish Steve

Gonzor wrote: »

Just had a quick glance at whats being mentioned already so forgive any repeats.

1) How do small buisnesses cope with this? Take the local corner shop. Or your local taxi driver? They now need to purchase hardware/computers or go out of business? How much is it going to cost the small business to get this setup.

A lot of small businesses already have electronic processing, and if this was to become a reality, there would be other methods, using things like one time cards, or similar,

2) It causes a lot of problems with giving money to other people. Your teenage daughter is going to the cinema and needs 30euro.... if you know in advance then you can transfer money to her card/account but what about when she tells ya at the very last minute.

the transfer is made there and then, using either the net, or a mobile phone, or a phone line transfer, the technology is already there and in use, just not always available 24/7 at the moment, but that's the supplier's choice right now.

3) It wont really stop criminals and people buying drugs. That 50euro I transferred to his account that day was because he washed my windows/sold me some playstation games etc.... And Im sure the bigger fish will similarly have their excuses lined up about poker games and donations and what have ya... though on the plus side we mightened be able to prove criminality but we could certainly look into taxing them.

Looks like a plus to me, and depending on the time of day, and the other aspects, etc, a much better trace of activity is available, so that all looks good in that respect.

4) What happens when there is a powercut at your local spar. Or if the internet (presuming this is all done online) goes down.

Exactly the same as happens now, the local spar etc is pretty much in trouble with bar code scanning tills and the like already, and there are cheap options to provide backup power to things like tills already.

5) What happens when hackers start messing with the system.... no point in saying they wont even at least try. Because they will.

Yes, but hopefully, most of it will be on Linux based boxes rather than Microsoft boxes, so hacking is harder to do, and the same issue applies, if the transaction is electronic, for it to happen, there has to be a trail, and even hackers don't like being traced.

And then to top it all off, I cant see the people of Ireland agreeing to this. Too many people would have to much too lose, the small shops, worried criminals, politicians trying to hide papertrails or anybody thats in the "brown envelope game" in any way, shape or form.

Shame Criminals and politicians inconvenienced by having to be honest, that will be a refreshing change indeed, who knows, after a few years, we might even be able to trust the politicians again.

Things like Social Welfare fraud, along the lines of a couple that fly to Turkey every other month with 2 empty suitcases, use a relative's apartment for a few days, and come back with the 2 suitcases stuffed with things to sell, one case pays for the flights, the other is clear profit, yet they are on benefits, if they can't hide the cash like they do now, they can't fiddle the system in the way they do now.

I reckon that's a good plus for all the rest of us.

No cash would upset the travelling community as well, as they'd have less ability to hide their activities, Oh dear, pardon me if I don't shed too many tears about that change.

Would also be interesting to see how many non Irish benefit claimants are actually resident here, or do they arrive on Ryanair the day before they are due to sign on, and return the same evening after they've signed?

Disability benefit claimants who are suddenly found to have a significant income from "unknown" sources?

Double jobbers, who are paid cash for the second job?

Refugees who are on benefit and not supposed to be working, but are? There are apparently 15 taxi's operating out of the camp at Mosney.

All of these are a part, maybe not a large part, but a part of why the social welfare bill is as high as it is, and if it came down, that's a step in the right direction of getting the cost of living in Ireland back down to manageable levels, which will help reduce the overall bill that everyone else is having to support right now.

Yes, the banks and speculators, encouraged by naive or ignorant (I'm still not sure which) politicians caused a lot of it, but the other aspect is that even if the property bubble hadn't exploded in the way that it did, the total governement spend was too high, and had/has to be brought down to a level that all of us can afford.

If taking cash out of the loop, especially if the Euro goes bang in the next while, will help get a better management of all aspects of the way Irish Society is operating, then maybe it should be being looked at in a more strutured manner.

No, it won't be easy, none of what we're facing right now is easy, and that's part of the problem, too many people are looking at it and turning away from the issues because they are too hard.

That's not going to solve the problem, and if we want to have an Irish nation that people can be proud of, and that will work properly for the children that are still being born on a day by day basis, then everything has to go into the melting pot to be tested by heat and fire, and if it's not viable, then it has to change, and the present social and economic structure of what's left of Ireland has to be a prime candidate, along with things like the church/state relationship, the future of the Irish Language and all things related to it, and if we really are honest, the whole structure and direction of the Republic.

Republic 2 may not be so far away, or such a bad idea, if it means that the children being born now will have a future. At least it has the potential to be a bloodless revolution. Ireland is large enough, and paradoxically small enough to be able to withstand the pressures and problems of making such changes in ways and timescales that are just not an option for larger nations, and the end result could well be a much better place to live for the future generations.

It's time to move on from cronyism, the brown envelope culture, and the divisions that have hindered progress for too long.

Ireland is a different society now to what it was even 20 years ago, and as a result, the changes needed now are massive even compared to 20 years ago. If they are made, there is a future, if they are not, I fear there will not be a future that I would want to be part of or associated with.

Yes, I've drifted away in some respects from the original subject of the thread, but that's because it's part of the overall picture, and the overall picture is what we have to deal with, and right now, we need any and all methods, however controversial, that will deal with the problems that are out there right now.

Steve

SupaNova

Read this article today and thought of this thread.

As has been widely reported recently, an unlikely crime wave has rapidly spread throughout the United States and has taken local law-enforcement officials by surprise. The theft of Tide liquid laundry detergent is pandemic throughout cities in the United States. One individual alone stole $25,000 worth of Tide detergent during a 15-month crime spree, and large retailers are taking special security measures to protect their inventories of Tide. For example, CVS is locking down Tide alongside commonly stolen items like flu medications. Liquid Tide retails for $10–$20 per bottle and sells on the black market for $5–$10. Individual bottles of Tide bear no serial numbers, making them impossible to track. So some enterprising thieves operate as arbitrageurs buying at the black-market price and reselling to the stores, presumably at the wholesale price. Even more puzzling is the fact that no other brand of detergent has been targeted.


What gives here? This is just another confirmation of Menger's insight that the market responds to the absence of sound money by monetizing highly salable commodities. It is clear that Tide has emerged as a subsidiary local currency for black-market, especially drug, transactions — but for legal transactions in low-income areas as well. Indeed police report that Tide is being exchanged for heroin and methamphetamine and that drug dealers possess inventories of the commodity that they are also willing to sell. But why is laundry detergent being employed as money, and why Tide in particular?

:pac:

Scofflaw

SupaNova wrote: »

Read this article today and thought of this thread.

:pac:

You know, even though I'm opposed to the cashless society myself, I find that article too grindingly in my face to read even as far as the bits you quote:

dragooned into the banking system...notoriously corrupt...government...hard-earned income...plundered by the state...Swedish central bank...gloated....fiscal and monetary apparatchiks, who themselves hate and fear transparency like vampires do sunlight...

Reads like the work of an over-excited undergrad trying his hand for the first time at propaganda.

cordially,
Scofflaw

patwicklow

be more like this http://theintelhub.com/2012/04/15/the-banksters-ultimate-dream-a-cashless-society-starting-with-the-military/

Scofflaw

patwicklow wrote: »

be more like this http://theintelhub.com/2012/04/15/the-banksters-ultimate-dream-a-cashless-society-starting-with-the-military/

Reading that one certainly makes the first one appear a lot less hysterical, anyway.

amused,
Scofflaw

andrew

Fromthetrees wrote: »

1. NO PRIVACY.

Yeah, for this reason I think it's a terrible idea, but to play devil's advocate for a bit:

2. BANKS WILL BE VERY POWERFUL. (look what has happened already)

Given they're already incredibly powerful, it doesn't seem like this gives them that much more

3. IDENTIFICATION THEFT.

This can already happen under the status quo. And under the status quo, someone doesn't even have to go so far as to steal your identity to rob your money, all they have to do is steal your cash. This would make stealing money harder.

4. If you lose your card it takes time to get a new one. (how do you live?)

Have more than one card for the same account. Some people can't live without glasses, so they've two pairs, or their car, so they've two sets of keys. Also, I imagine it'd be technologically feasible to establish an express card replacement service.

5. Impractical as it can break easily.

Then make it so that it doesn't break easily? I don't have a credit card so I don't know, but do they suffer from frequent outages?

6. Who actually controls societies money? Where does control of it stop? (is banning alcoholics from buying drink the next logical step?)

Slippery slope

7. Surcharge/interest charge on every single transaction of goods and services.

Why does that necessarily follow? Perhaps it'd be the other way around, and if you wanted to use cash of some sort (assuming you could) there'd be a surcharge on that, because then the shop would have to process the cash.

8. Impractical if you move to overseas.

How? You'd still be able to go into a bank, and request X amount of foreign currency, in the same way you to today.

9. Impractical for tourism.

Local shops can already accept foreign laser/credit cards, right? Now, tourists would just be confined to using those cards.

10. Cards become expired and then you have to buy/get a new one which can take time. (how do you live?)

People would do the same thing they do regarding all the other things they need to live; they'd plan ahead. People rarely go hungry because they forgot to buy enough food.

11. Might forget your pin.

There are ways of retrieving your pin which exist today, and if you needed the pin to live you probably wouldn't forget it.

12. You might spend money that you need for something else without realising it.

With the advent of online banking, it's already pretty easy to keep track of expenditure. You'd still be able to get printed statements like you currently do.

13. People spend more when they have a card compared to cash, http://www.livescience.com/2849-study-credit-cards-spending.html

Maybe this effect won't be so pronounced when all they have to spend is card money. And anyway, more spending would be good for the economy

14. Without cash there would be no instant payments for goods and services.

Cashless instant payments already exist. Online banking already makes it really easy to transfer money to someone's account too.

14. You lose having the liberty that cash gives a person.

If you mean the privacy point above, I take it. But assuming every shop takes card in this cashless economy, you wouldn't lose any liberty at all.

15. It's very easy to lose a card.

It's also easy to lose cash, and once it's lost, it's gone from you forever. At least if you lose a card, nobody else can spend that money, so it'd make it harder to lose money.

16. Our government can't be trusted with running a piss up in a brewery let alone having complete control over everyone's money.

Given credit card companies manage to run their services well, I imagine the government could subcontract the service to a company who knows what it's doing. Or it could be a mostly private initiative.

Are there enough reasons here not to have a cashless society?

As I said it think it's a terrible Idea, just not as terrible as people seem to think.

Finnbar01

andrew wrote: »

As I said it think it's a terrible Idea, just not as terrible as people seem to think.

It's far worse than you think.

If we have a cashless society then government would be in total control of the money.

One thing the government would do is to bring in an interest rate below zero. The reasoning behing this, is that people would spend their money and thus our economy would improve.

What would more than likely happen, is that prices would rise and
production would fall.

Take into acount a loss of our privacy and an erosion of our liberty, this is an atrocious idea.

Icepick

Finnbar01 wrote: »

The type of system you propose, would lead to nothing short of a totalitarian state.

real-life example (although non-existence of electronic banking made this possible in the first place)

andrew

Finnbar01 wrote: »

andrew wrote: »

As I said it think it's a terrible Idea, just not as terrible as people seem to think.

It's far worse than you think.

If we have a cashless society then government would be in total control of the money.

One thing the government would do is to bring in an interest rate below zero. The reasoning behing this, is that people would spend their money and thus our economy would improve.

What would more than likely happen, is that prices would rise and
production would fall.

Take into acount a loss of our privacy and an erosion of our liberty, this is an atrocious idea.

The government don't and wouldn't control interest rates.

Finnbar01

andrew wrote: »

The government don't and wouldn't control interest rates.

If we go to a cashless society, the government will also take control of the interest rates. They will not be able to resist. It is in the nature of the beast.

andrew

Finnbar01 wrote: »

andrew wrote: »

The government don't and wouldn't control interest rates.

If we go to a cashless society, the government will also take control of the interest rates. They will not be able to resist. It is in the nature of the beast.

that doesn't follow at all; The independence of central banks is not a function of the form which cash takes.

patwicklow

https://www.youtube.com/watch?v=EyjGD-USfDc

Black Swan

MOD REMINDER:
Vid-only posts without discussion are not allowed by charter. We are a discussion forum, so please discuss. Irish Economy charter:

Dr Galen wrote: »

Posting a link to a video hosted elsewhere does not constitute discussion.

Finnbar01

andrew wrote: »

that doesn't follow at all; The independence of central banks is not a function of the form which cash takes.

Do you trust the government enough not to take control of the interest rate?

Lantus

Well we already have a part electric system allready. There is no where near enough 'real' money (I mean the paper and coins we tout as money) to match the value of money in bank accounts or from loans or other assets, its just a small percentage.

Although total electric currency has some benefits it gives banks and governments an almost absolute control over its populace. Given how little trust we currently have in them and how littel accountability they have I would be not happy to see them gain this control.

It's a step towards a world order of total control that North Korea would be proud of.

andrew

Finnbar01 wrote: »

andrew wrote: »

that doesn't follow at all; The independence of central banks is not a function of the form which cash takes.

Do you trust the government enough not to take control of the interest rate?

The creation of a cashless economy is not what would enable governments to control interest rates. In principal, governments have always had, and do have, that ability, to set interest rates if they really wanted. This is a power which has been voluntarily ceded to central banks, and there's no reason that a move to a cash less economy would change that.

TheChizler

How would banks be given total control? The OP hasn't stated the exact system that would be used. It's the concept that is most interesting.

To address this first the issue of total-bank-control could be overcome a number of methods, such as using some open-source system. NFC phone payments already allow small amounts to be paid from a 'digital wallet', no different from having cash in a real wallet. This approximates quick pin-less 'cash' transfers. That system could easily be modified to allow cash transfers from person to person, without having to contact a banking institution. It's just a matter of setting the standards. Losing this 'digital wallet' would be no different to losing your wallet or phone. Obviously larger amounts/access to your bank account would require some user authentication.

Many people operate nearly cashlessly. In Canada I've been told it's the norm to pay for single items with credit cards. If operating cashlessly became the norm, and the protocol became open-source, equipment needed to process payments would become very affordable.

Of course in any technology there will always be issues with security, but we've been using credit/debit cards for years and there's been very few major security breaches. It's entirely conceivable that this could be overcome to an extent to make it feasible.

Shouting down an entire concept because of single practical issues doesn't allow for progress, it discourages conversation and innovation and doesn't contribute to worthwhile debate.

The Corinthian

Interesting concept, that sooner or later will come to pass. However there are huge logistical and technological mountains to overcome first.

Firstly, the Devil's in the detail; how would it work? A card that you can 'load up' at an ATM, which requires a pin to use? Or no pin? Something based on the Laser model?

Consider the logistics of this in terms of hardware and networks with the first option. Every shop you go to you will have to use a card reader and type in your pin whenever you buy a packet of gum. Retail would begin to resemble the Soviet era, in terms of cues. Additionally, verification would require network access to be secure, and while the data transmitted is light, the volume would be so great as to add significant load on our networks.

Or does one bother with a pin - after all, we don't need a pin to open our wallets, so we could simply stick our cards in and accept the payment with a yes or no. No pin, no verification, no network traffic. But also no security.

Or something akin to a Laser card, tied into your bank account? What happens if you can't open an account?

Is the money 'on the card' or 'in the system'? This would be the first question that needs to be answered. On the card means no big brother tracking cash transactions, but it also means that we can still lose our 'wallets' or get mugged - indeed, outside of using a card and reader rather than cash, not much changes.

The 'in the system' approach requires a monstrous data architecture, not to mention security and fail-safes. Of the last, can you imagine the effect on the economy of a system crash? Imagine the effect that all the ATM's from a single bank going down for a few hours has and then multiply this by 1,000.

Then there's cost. Fiat money - paper notes or metal coins - is cheaper to produce than chip & pin cards. And that's before we consider that everyone would also need a 'reader' device; how else are you going to lend your mate a few quid or give your kids pocket money?

So, political and philosophical arguments aside, it's probably not a practical option for the foreseeable future. I have no doubt that is shall be some day, but not today.

AlmightyCushion

The Corinthian wrote: »

Interesting concept, that sooner or later will come to pass. However there are huge logistical and technological mountains to overcome first.

Firstly, the Devil's in the detail; how would it work? A card that you can 'load up' at an ATM, which requires a pin to use? Or no pin? Something based on the Laser model?

Consider the logistics of this in terms of hardware and networks with the first option. Every shop you go to you will have to use a card reader and type in your pin whenever you buy a packet of gum. Retail would begin to resemble the Soviet era, in terms of cues. Additionally, verification would require network access to be secure, and while the data transmitted is light, the volume would be so great as to add significant load on our networks.

Or does one bother with a pin - after all, we don't need a pin to open our wallets, so we could simply stick our cards in and accept the payment with a yes or no. No pin, no verification, no network traffic. But also no security.

Or something akin to a Laser card, tied into your bank account? What happens if you can't open an account?

Is the money 'on the card' or 'in the system'? This would be the first question that needs to be answered. On the card means no big brother tracking cash transactions, but it also means that we can still lose our 'wallets' or get mugged - indeed, outside of using a card and reader rather than cash, not much changes.

The 'in the system' approach requires a monstrous data architecture, not to mention security and fail-safes. Of the last, can you imagine the effect on the economy of a system crash? Imagine the effect that all the ATM's from a single bank going down for a few hours has and then multiply this by 1,000.

Then there's cost. Fiat money - paper notes or metal coins - is cheaper to produce than chip & pin cards. And that's before we consider that everyone would also need a 'reader' device; how else are you going to lend your mate a few quid or give your kids pocket money?

So, political and philosophical arguments aside, it's probably not a practical option for the foreseeable future. I have no doubt that is shall be some day, but not today.

Why wouldn't it just work like our current systems (debit/laser cards). You get a card with a pin that's tied to your account. It takes money from that. Not everyone would need a reader, only shops would. If I want to give my friend €50 I can just do it electronically via online banking, like I can now. Every shop would need one but most already do, I can't remember the last shop I was in that didn't accept card transactions and I think the bank/credit provider even covers the cost of the equipment so smaller shops that don't currently have one can implement it without significant expense. While a card is more expensive to produce than a note or a coin, a card will usually last years (I've had ATM cards last 5+ years and the only reason my debit/credit cards haven't lasted as long is because they've expired) so the cost is probably cheaper than note and coins.

Technically, I reckon we could implement it now, if we wanted. Obviously, a lot of people might not like it but technically I can't see why it isn't doable.

jester77

The Corinthian wrote: »

Interesting concept, that sooner or later will come to pass. However there are huge logistical and technological mountains to overcome first.

Firstly, the Devil's in the detail; how would it work? A card that you can 'load up' at an ATM, which requires a pin to use? Or no pin? Something based on the Laser model?

Consider the logistics of this in terms of hardware and networks with the first option. Every shop you go to you will have to use a card reader and type in your pin whenever you buy a packet of gum. Retail would begin to resemble the Soviet era, in terms of cues. Additionally, verification would require network access to be secure, and while the data transmitted is light, the volume would be so great as to add significant load on our networks.

Or does one bother with a pin - after all, we don't need a pin to open our wallets, so we could simply stick our cards in and accept the payment with a yes or no. No pin, no verification, no network traffic. But also no security.

Or something akin to a Laser card, tied into your bank account? What happens if you can't open an account?

Is the money 'on the card' or 'in the system'? This would be the first question that needs to be answered. On the card means no big brother tracking cash transactions, but it also means that we can still lose our 'wallets' or get mugged - indeed, outside of using a card and reader rather than cash, not much changes.

The 'in the system' approach requires a monstrous data architecture, not to mention security and fail-safes. Of the last, can you imagine the effect on the economy of a system crash? Imagine the effect that all the ATM's from a single bank going down for a few hours has and then multiply this by 1,000.

Then there's cost. Fiat money - paper notes or metal coins - is cheaper to produce than chip & pin cards. And that's before we consider that everyone would also need a 'reader' device; how else are you going to lend your mate a few quid or give your kids pocket money?

So, political and philosophical arguments aside, it's probably not a practical option for the foreseeable future. I have no doubt that is shall be some day, but not today.

This is pretty much standard in Europe, surprised it is not already in Ireland. You go to the ATM and you have the choice to either withdraw cash or add cash to your card up to a maximum. You can then use the card to pay for small items without a PIN. It's most frequent use here is for buying cigarettes from the automats that you find on most street corners. Plus this has the advantage that the ATM card is pre-programmed with your age, so no under age people can buy something that has an age limit.

As for security, it's exactly the same as taking out cash. Your card is in your wallet. Lose you wallet, lose your cash. No different than the way it is now.

The Corinthian

And if you don't have a bank account?

Or you want to give the kids their pocket money?

How's that work then?

AlmightyCushion

The Corinthian wrote: »

And if you don't have a bank account?

Or you want to give the kids their pocket money?

How's that work then?

Well, if we had an "electronic wallet" style system like Jester refers to above (which sounds pretty sweet, no cash society or not), then the child could have a card as well and you could transfer funds to it as you please.

As for the bank account, will this affect any one? Homeless people maybe. No fixed abode would mean it's impossible to set up an account with the current system we have. Maybe the ability to set up an account that is more limited (no overdraft etc.) but doesn't require an address. Tourists and visitors could use their existing debit/credit card or maybe get a temp card that they can transfer funds to like the child card above.

This is just something I thought of off the top of my head. If someone actually put their mind to it they could probably come up with something better.

The Corinthian

AlmightyCushion wrote: »

Well, if we had an "electronic wallet" style system like Jester refers to above (which sounds pretty sweet, no cash society or not), then the child could have a card as well and you could transfer funds to it as you please.

And the cost of supplying everyone with one (or more as these things will break or get lost) cards? And you would have to go to an ATM to pay your kid pocket money?

As for the bank account, will this affect any one? Homeless people maybe.

That the homeless cannot open an account (and thus in the ultimate poverty trap) would cause a social outrage to begin with.

Then there are lots of people have difficulty opening accounts, especially nowadays. When my partner moved to Ireland originally, it took her six months to open one, for example. Low income families often have poor access to banks or bank accounts - deprived areas are a little thin on ATM's too, while we're at it.

And then there's the question of tourists? Do they have to open an account in Ireland too?

This is just something I thought of off the top of my head. If someone actually put their mind to it they could probably come up with something better.

I understand that it's just something you thought of off the top of your head and I agree that eventually we will get there. However, if you go a little deeper than off the top of your head you begin to see social, fiscal and logistical problems with it, and on that basis I don't think we're quite ready for it yet.

TheChizler

The Corinthian wrote: »

I understand that it's just something you thought of off the top of your head and I agree that eventually we will get there. However, if you go a little deeper than off the top of your head you begin to see social, fiscal and logistical problems with it, and on that basis I don't think we're quite ready for it yet.

And if you go a little deeper than seeing social, fiscal and logistical problems you begin to see solutions as well.

No system is entirely perfect, there's no point disregarding something cause you can see a problem. There are huge problems with cash payments and we don't just abandon that. This is still at a concept stage, not full specification. That said it's still interesting to have these problems pointed out so we can get ideas and solutions out there!

On the points on homeless people and tourists, there are a few things to consider. Today smartcards can be made for pennies, it's not unreasonable to think that homeless charities or welfare offices could supply the empty 'digital wallet' to homeless people at a low cost. As a poster above said you can easily hang on to them for many years, so it's likely a one-off cost. On the point of tourists, as cards could be so cheap it would be possible to provide them at foreign exchanges or shops, like the current 3V card. If following the wallet concept there would be no need to have a bank involved. Many phones in the next few years will have NFC as standard. It's conceivable that the tourists would already have this technology on their phone, so that could be used to access the manage the card/transfer money from person to person. If not, it's possible that a device could be rented from a foreign exchange or something that could provide this function.

Still I think as long as the rest of the world deals in cash there will always be a need for small cash payments, but it's very possible that this could be in very rare cases.