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The decline of cash in Europe…

The decline of cash in Europe…

Step by step, haléř coins with higher and higher value were withdrawn from circulation until they were eradicated completely. Similarly, one and two koruna coins slowly lose any meaning and five koruna coins are only good for shopping carts. On the other side, there is a Masaryk banknote, which is so big that it won’t even fit into most wallets, so we tend to keep them in shoeboxes. In the rest of Europe, 500 euro banknote’s future is doubtful – shopkeepers won’t accept them simply because it’s suspicious that someone uses it – and cent euro coins end up in fountains. Are we going to stop using cash completely?

… and the rise of electronics

According to the World Bank, a billion new customers opened their first bank account. However unlikely that might be, absolutely everyone would have a bank account my 2040. Banks in the Czech Republic reacted to latest trends unusually quickly. Contactless debit cards became widespread in a shockingly short period of time – over seven million of them were issued so far, which is an amount similar to German figures. Other modern conveniences that Czech people love are online banking mobile apps or NFC mobile payments.

In case you don’t trust banks, non-banking payment systems allow their customers to transfer money internationally. They include MoneyPolo, which is especially good for sending larger amounts, or Venmo, a mobile app designed for micropayments between friends – great for inviting someone to a beer or splitting the dinner bill.

Cancelling cash in the Czech Republic

The state inclines to cancelling cash, too. It often arguments that cash the main tunnel by which tax payments are being evaded. The truth is that cash makes financing illegal activities fairly easy because it is untraceable. The Ministry of Finance of the Czech Republic (MFČR) is currently trying to push the electronic sales registration through and many fear that should it happen, cash will be the only option how to remain a hundred percent anonymous.

MFČR is also aware of the fact, that interest cannot be falling forever, but since the state is in serious need of money, they might just as well plunge below zero. And let’s be honest, most people won’t be willing to pay the bank for sitting on their money. Logically, they will choose to withdraw their money – zero interest is better than a robbing one. But here comes the Ministry of Finance again: it cancels cash for good. Adam Michl, the minister of finance’s advisor, even admits that a monetary reform is easier if it only takes place electronically.

These three measures – negative interest, preventive cash cancellation and a following monetary reform – are last desperate efforts of the state to wring some money and refresh a lazy economy. But do not fear, it may not necessarily be a worst-case scenario in which the state forces us to spend every single penny otherwise it would be taken away from us at the end of the month.

Where there’s no will, there’s a way

The Swedes, for example, consider cash so tiresome that they stopped using it despite the Swedish central bank Riksbank’s -0.85% interest. This might be a result of the assumption that whoever pays in cash in Sweden is either a terrorist of a money launderer. After all, it is illegal to pay more than 270.000 CZK in cash in the Czech Republic. (This amount was already lowered once and because of inflation it keeps lowering itself even further.) It is possible that MFČR will make paying in cash so complicated and unpleasant that we will cease to do it willingly. Then we will become reconciled with negative interest, too, and we will back our wealth with our own gold…