Why Financial Experts Predict End of Cash 

We live in a digital world where most transactions occur online or through mobile devices, meaning that cash doesn’t actually change hands. Think about how the world works today.

You are given a direct deposit of your salary into your bank account. Then, you pay your bills through online bill pay programs. You purchase goods and services using a debit or credit card.

Often, people don’t even have cash in their wallets. Therefore, it is easy to see why financial experts predict that cash soon will be gone for good.

But this is not the only reason why experts think cash is going to disappear in the future. Despite these common occurrences, financial experts point to other events that are leading to an end of cash.

Europe Sets Limits

The European Central Bank plans to forbid 500 euro notes. During the same week, an economist at Harvard University argued for the United States to eliminate the $100 bill and change the $10 or $20 bills.

In addition, places throughout Europe are restricting cash transactions. For example, Italy says it’s illegal to pay cash for anything worth more than 1,000 euros($1,116).

Another European nation, France, has set a limit on cash transactions at 1,000 euros ($1,100). If you work in the United Kingdom, you might be surprised to know that you have to register with tax authorities if you spend more than 15,000 euros ($16,521) in cash.

Those who violate these restrictions face fines costing thousands of euros that you can’t pay in cash. In addition to all these, it is believed that Germany is also considering a restriction on cash transaction.

According to government officials, they have taken the actions against cash because of criminals who want large-denomination bills. They want electronic transactions so there is a financial digital paper trail. At the same time, they got upset when American counterterrorist officials were watching the digital money trails through the Swift global system. Criminals will get their hands on cash regardless of what people do.

Politics Cause Issues

Politicians and central bank officials want to get rid of cash because it interferes with negative interest rates. Japan and Europe already have negative interest rates, and the U.S. Federal Reserve could be following suit soon.

Negative rates force a tax on bank deposits that persuade people to remove their deposits to spend them and help the economy. If Americans decide to keep their cash in mattresses as they did in the past, the bankers lose. People can ask for large bills and keep the money in a safe somewhere. However, if they ask for smaller bills, they are not likely to hoard as much cash. The solution to this dilemma is to ban cash transactions. This is why many politicians and economists are recommending eliminating paper currency.

Banks Charge for Cash Transactions

According to Chris Nichols, chief strategy officer of Center State Bank, banks are pushing for a cashless strategy. He predicts within five years, we won’t have any more cash.

Already, banks are making digital files of checks. Coins and currency can’t be digitized. The cost of managing currency and coins runs more than $200 billion. While cash is expensive, it costs more to get rid of cash.

However, phasing out of cash will happen, he said, because businesses will phase it out indirectly. For example, places around the world are allowing businesses to charge more if people pay cash.

Investments Are Electronic

For those who trade on the stock market or in other investments, do so without cash. They often trade via the Internet. They can choose to invest in commodities or other things. optionsclick binary options is a great example of a binary options broker that helps clients invest in a number of options, including stocks, funds, currencies and commodities.

Investors trade mutual funds, buy and sell stocks, invest in bonds, and do more online. They no longer provide a large amounts of cash to a broker to get an investment. Today, they do all their work themselves through online trading and send digital currency. For example, say people want to buy binary options, they would read about binary option reviews before trading. Then, make a decision on trading.

Not Everyone Convinced

Some financial experts disagree that cash is going away. They point to things, such as gray markets as an indication that cash will remain into play. Such markets exist because high taxes and regulatory costs drive the otherwise honest businesses off the books. Politicians might not want to crack down on cash economy when it could put millions out of work.