The war on cash has been going on for decades. The U.S. abolished the $500 bill in late 1969. (The old $500 bill featured a portrait of President William McKinley, by the way. I remember seeing a few when I was a kid). Today’s $100 bill is only worth 10 cents-on-the dollar compared to the $100 bill of 1969.
Europe abolished the €500 note a few years back. We all recall what happened in India in late 2016 when India abolished the 500 and 1,000 Rupee notes (worth about $10 and $20 respectively); there was mass chaos as peasants lined up to turn in the old notes for digital credit. ATMs were shut down because replacement notes were too big for the ATMs!
Now the war on cash is being taken to a new level. China, the world’s most populous country with the world’s second largest economy, has said that physical cash may soon become obsolete, according to this article.
China has huge digital payments platforms developed by their own companies, Tencent and Alibaba, in addition to traditional credit and debit cards and mobile phone payments. Movements like this might start slowly, but they gain momentum and end quickly.
Cash can be expensive to handle because vendors have to hire armored cars to move it, buy machines to count it, pay premiums to insure it and risk losses due to theft. Those costs only make sense if they can be spread among a high volume of cash. Once cash usage falls below that critical threshold, the handling costs per unit are too high and merchants quickly abandon cash altogether.
China may be getting close to that tipping point and will get there sooner if the government pushes cash off the ledge by regulation. This is consistent with the Communist plan for total control of their people.
Once physical cash is gone, your liberty is gone because government can easily monitor and freeze all digital payments. The only recourse for the Chinese people once their cash is gone will be physical gold and silver.