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Limiting the Use of Cash for Big Purchases: Assessing the Case for Uniform Cash Thresholds

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  • Sands, Peter
  • Weisman, Benjamin
  • Campbell, Haylea
  • Keatinge, Tom

Abstract

For all the hype about electronic payment systems, cash remains by far the world’s most popular mechanism. However, over the past year we have seen an intensification of the discussion about the role of cash in society. Cash has great advantages: it is familiar, simple to use and ubiquitously accepted. However, cash also has downsides. Because cash transactions leave no record, cash plays a critical role in money laundering, tax evasion and terrorist financing. This debate generates strong feelings, to the extent that it is sometimes depicted as a “war on cash”. Some decry moves to curtail cash usage as an unwarranted encroachment on individual liberty and a manifestation of an over-reaching state. Others see physical cash as a costly remnant of a pre-digital age that we should get rid of as soon as is feasible. Yet it is also possible to hold a position between these extremes: acknowledging the continued value of cash in modern society, whilst seeking ways to curb its misuse. In 2016 we witnessed a number of policy initiatives aimed at curbing the illicit use of cash. For example, the ECB decided to stop issuing the €500 note due to concerns about its role in illicit finance. India implemented a radical “demonetisation” strategy, abolishing the 500 and 1000 rupee notes in an effort to tackle the scourge of “black money”. Various governments promoted innovative digital payments systems to replace cash, accelerate financial inclusion and reduce benefit fraud...

Suggested Citation

  • Sands, Peter & Weisman, Benjamin & Campbell, Haylea & Keatinge, Tom, 2017. "Limiting the Use of Cash for Big Purchases: Assessing the Case for Uniform Cash Thresholds," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162906, Deutsche Bundesbank.
    • Handle: RePEc:zbw:iccp17:162906
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    Cited by:

    1. Giammatteo, Michele & Iezzi, Stefano & Zizza, Roberta, 2022. "Pecunia olet. Cash usage and the underground economy," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 107-127.
    2. Francesco Flaviano Russo, 2022. "Cash thresholds, cash expenditure and tax evasion," Fiscal Studies, John Wiley & Sons, vol. 43(4), pages 387-403, December.
    3. Seitz, Franz & Krueger, Malte, 2017. "The Blessing of Cash," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162911, Deutsche Bundesbank.
    4. Rainone, Edoardo, 2023. "Tax evasion policies and the demand for cash," Journal of Macroeconomics, Elsevier, vol. 76(C).
    5. Christine Lewis, 2019. "Raising more public revenue in Indonesia in a growth - and equity-friendly way," OECD Economics Department Working Papers 1534, OECD Publishing.
    6. Francesco Flaviano Russo, 2020. "Cash Thresholds, Cash Expenditure and Tax Evasion," CSEF Working Papers 579, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Franz Seitz & Hans-Eggert Reimers & Friedrich Schneider, 2018. "Cash in Circulation and the Shadow Economy: An Empirical Investigation for Euro Area Countries and Beyond," CESifo Working Paper Series 7143, CESifo.
    8. Nadia Pocher & Andreas Veneris, 2022. "Central Bank Digital Currencies," Springer Optimization and Its Applications, in: Duc A. Tran & My T. Thai & Bhaskar Krishnamachari (ed.), Handbook on Blockchain, pages 463-501, Springer.
    9. Bohne, Albrecht & Koumpias, Antonios M. & Tassi, Annalisa, 2023. "Cashless payments and tax evasion: Evidence from VAT gaps in the EU," ZEW Discussion Papers 23-060, ZEW - Leibniz Centre for European Economic Research.

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