The war on cash is about much more than cash

Over the last few years there has been considerable controversy over proposals to abolish cash, the so‐called War on Cash (WoC). This idea was first put forward by Kenneth S. Rogoff in 1998 and has subsequently been developed further by other economists as well as Rogoff himself. Among the principal benefits claimed for this policy are, first, that it would help combat crime, and, second, that it would give central banks additional room for monetary policy manoeuvre. Central bankers have long chafed at the constraints on monetary policy imposed by the zero lower bound, the inability to push interest rates below zero; and as interest rates have fallen, central banks have seen their ability to further reduce interest rates become severely squeezed. Abolishing cash would enable them to overcome this constraint and give them additional room for supposedly ‘stimulative’ monetary policy by allowing them to push interest rates deep into negative territory. The point here is that if central banks were to attempt to implement negative rate policies without first abolishing cash, people would switch large‐scale into cash to thwart their efforts. So cash would need to be abolished to enable central bankers to force people into negative‐rate assets. The big‐payments firms are also promoting the WoC. These firms, however, are not pushing the benefits of cashlessness out of any sense of public benefit, but for hard commercial reasons. Consider the following quotes from recent newspaper reports: