(TDV) From Scandinavia to Amsterdam to India and elsewhere, the trend of going “cashless” is gaining traction.
We have been covering the shortcomings of what is rightly called the War On Cash here at TDV for a while now and have shown just how negative the effects can be on an unsuspecting nation’s people.
Chandigarh, India, which is the capital of the northern Indian states of Punjab and Haryana, is like one of India’s labrats. Indian officials are working hard toward making it into India’s first cashless city.
This initiative is part of the Prime Minister of India’s call for state governments to begin developing what he’s calling “smart” cities.
That means cities attached to the latest internet technology. However there is nothing intelligent about his plan.
One of the major changes being made to work toward that objective was the insistence of having all bills paid electronically at government offices within the city.
Similarly, in Panjim, the capital of Goa, India, the local government is attempting to incentivize the locals into paying digitally by offering them discounts on train tickets and other public transportation services if they pay electronically.
This is an extension of the ongoing cash battle which has been going on in India since November when Modi announced he was going to replace the 500 and 1000 rupee banknotes. However the government has not started replacements, only ensured the removal.
What followed the eradication of India’s largest denomination notes was a constricted Indian economy, particularly among the middle and lower classes who rely predominantly on cash transactions to conduct daily business.
There are a myriad of problems associated with this. Many street vendors, rickshaw drivers, and other small time merchants cannot afford the card readers necessary to conduct the transactions electronically.
In some cases the consequences have been starvation, suicide, and the inability to pay for medical expenses because of lack of access to funds or because of how difficult it is to exchange the 500 and 1000 rupee notes for lower denomination bills.
Also in Europe, in places like London, many stores and restaurants have stopped accepting notes or coins for payment and only allow their customers to pay with plastic.
It’s becoming common for Londoners to treat people using cash as second class citizens. In other words, it is becoming unfashionable to pay with cash according to the status quo.
The same is true for the people of Sweden, particularly in the cities of Stockholm and Gothenburg. Which is ironic considering that in 1661, the Scandinavian monarchy became the first country in the world to issue paper currency.
In Sweden this had forced people into storing their cash in bank accounts that come with negative interest rates – yes, the banks are charging them to save their money rather than rewarding them with positive yielding interest.