In fact, global governments trying to curb illegal activities could be the catalyst.
After months of heavy deliberation, the European Central Bank decided Wednesday to phase out the €500 banknote in an effort to curb terror financing and other illegal activities.
The bank announced plans to end production of the €500 note—worth $574—by the end of 2018, though bills in circulation will be taken as legal tender.
The note, also dubbed the Bin Laden, is rarely used by the general public. About 60% of Europeans say they’ve never seen one—but has been used to evade taxes, in terrorist operations, and other illegal activities.
But for some, the decision is momentous in ways more than just fighting criminal activity.
The move may also signify a greater push into a cashless economy, in which credit cards, digital payments and perhaps, one day, even bitcoin dominate.
“Eliminating the bank note could help temper criminal activity, but in reality the implications are much broader,” analysts from Stratfor wrote in a February research note. “The idea is just the most recent step in an ongoing process moving Europe, and indeed the world, closer to an entirely cashless economy.”
Indeed, European governments have been making efforts over the past few years to reign in cash. And governments also have a reason to create a cashless society: digital transactions make it far easier to regulate cash flows in and out of the country, and keep track of who is holding on to what. After all, who digitally transferred money where can be easily tracked—cash on the other hand, generally does not come with GPS. That would allow governments to make policies such as negative interest rates and capital controls potentially more effective.And according to some experts, other high denomination currencies around the world will be next to get the axe.Peter Sands, […]
