Understand The Times, International

The idea of a cashless society has long been touted by government and bank officials around the world for a variety of regulatory, financial and political reasons. For one, a cashless society would give governments and banks more power over people�s money. For example, the concept of negative interest rates falls apart if everyone is holding physical cash.

Bloomberg recently published an editorial endorsing the cashless society, and The New York Times has reported 20 percent of payments in Sweden are cash based. Additionally, the European Central Bank may soon axe the 500 euro bill. One only needs to do a search for �cashless society� on Google News to see all of the recent activity on this front.

There are a variety of reasons why some individuals would like to see a move to a cashless society. Some of these have to do with enhancing the ability for a government to control the economy, while others are about nothing more than enabling more efficient payments around the globe. Here are a few recent reasons given for moving away from cash (in no particular order):

Negative interest rates - Negative interest rates have already been implemented in Japan and a few countries in Europe, and Federal Reserve Chairwoman Janet Yellen recently stated the policy is not off the table in the United States if the economy were to become much weaker. In a cashless society, it would be more difficult for savers to avoid these negative rates, which would be viewed as a positive by central banks around the world.
More control over the citizenry�s money - There are a variety of other government policies that are only made possible -- or at least more practical -- by the digitization of money. It�s much easier to pull off a bail-in, enact capital controls, collect taxes and generally control where money goes when it�s all ones and zeros in a centralized ledger.
Terrorist financing, money laundering and other bad things - The reported use of the 500 euro bill by terrorist organizations and other bad actors is the main reason its existence is currently under review. Physical cash�s anonymous nature makes it attractive for illegal economic interactions. A completely digital monetary system would allow governments to track every fiat-denominated transaction with precision.
Convenience - Digital payment options are also simply more convenient than cash. The Internet allows individuals to send money across long distances, and swiping a card is less cumbersome than fiddling with nickels and dimes.
Lower costs - Issuing digital currency also comes with lower costs than printing physical cash.