Matthew Lynn at the Telegraph notes

a growing movement among academics and now governments to gradually ban the use of cash completely. It is inefficient, oils the underground economy, and makes it harder for central banks to manage the economy, or so runs the argument.

But while a “cashless economy would be far easier to both tax and control” for the authorities, it would afford to the governed both less convenience and less freedom:

A simpler and more efficient “payment technology” has never been invented. No matter how smart our mobiles get, or how much data can be loaded on to a debit card, a banknote is an incredibly efficient way to handle small transactions. It is costless, immediate, flexible, no one ever needs a password, it can’t be hacked, and the system doesn’t ever crash.

More importantly, cash is about freedom. There are surely limits to the control over society we wish to hand over to governments and central banks? You don’t need to be a fully paid-up libertarian to question whether, in a world where we already worry about the amount of data that Facebook and Google can gather about us, we really want the banks and the state to know every single detail of what we are spending our money on and where. It is easy to surrender that freedom – but it will be a lot harder to get back.

Filed under: banks, privacy