War against cash
Transformation of the Western world against the background of the destruction by Putin's Russia of the old system of international relations and European security system is accompanied by financial economic processes just as important. The most significant of those is the transition to e-currency and a massive attack on cash money, so loved by many.
In the new political and financial reality, the western banks struggle to keep afloat, and they deal with it by tightening control over cash flows. The main victim of this strategy is cash money that allows for both creating a variety of opportunities for corruption, and avoiding taxation. It is also the basis for transactions in shadow economy, and, a reliable financial protection of ordinary citizens from the banking dictatorship and loan traps. While there is a significant amount of physical currency in a total turnover, it is difficult for banks to establish financial dictatorship and actually control spending of most citizens.
In the new political and financial reality, the western banks struggle to keep afloat, and they deal with it by tightening control over cash flows
What gives rise to allegations that the war is being waged against cash money? In the first place, it is an active discussion in the European and U.S. financial circles of the idea of withdrawal from circulation of EUR 500 and $100 banknotes. For example, the European Central Bank recently made a decision to sack EUR 500 bills (informally referred to as "Bin Laden") from 2018. The main reason is the use of these banknotes in illegal operations. The share of these bills in the total euro cash turnover is only 3%, but their total cost already amounts to 28%. Interestingly enough, the biggest lobbyist for the introduction of the EUR 500 bills was Germany as it wanted to have an analogue of DM 1,000 banknotes. Besides, the volume of cash payments among Germans is quite high.
In the context of the overall strategy of a tighter bank control on a global scale, another round of an offensive against offshore jurisdictions should be considered. Publication of "Panama documents", which was lighted and Ukrainian episode is just another step, the continuance of which is planned in the near future. The main damning blow to expect on non-Western countries and their leaders, as well as the western countries and their partners, who actively contribute to the shadow financial turnover through offshore. It is not excluded episodic inclusion in the offshore listing of some Western politicians to increase pressure on them, which will not always mean the end of the political career of the last.
In the context of the overall strategy of tightening of bank control on a global scale, another round of an offensive against offshore jurisdictions should be considered
A striking example is the situation around British Prime Minister David Cameron, who is preparing to host the anti-corruption summit in London. By the way, the summit’s agenda will include the proposal to limit cash circulation and gradually shift to e-payments. The ultimate goal is a full transition to e-currency. The main pretext is the fight against corruption and the black market.
In this context is difficult not to agree with some Western experts, who consider an attack on cash money the attempt to establish full bank control over the entire population of the developed world. According to various estimates, about 10% of this population has no debts to the banks and take no loans, keeping their savings in cash or precious metals. In the case of full transition to e-money, no one will be left free of bank control. There is no doubt that, along with the war against cash, another fight will be launched soon against other natural analogues of cash payments, in particular, gold and other precious metals.
When everyone uses digital currency, the banks can easily block any accounts of any customers – there will be more than enough pretexts for this. But at the first stage, tax havens will be destroyed, and then cash money will be gradually disposed of.
By the way, G20 openly threatens with sanctions those countries that will not cooperate in terms of financial transparency and the fight against shell companies (and later also in terms of withdrawal of cash from a financial turnover). In this context, World Bank President Jim Yong Kim said that transparency would have no reverse gear...
Incidentally, it was at the Economic Forum in Davos this year, where the idea of transition to a cashless society to get over the economic stagnation was actively discussed.
In this context, Europe and the U.S. will continue to actively and successfully promote a sharp narrowing of the cash base, shifting to e-payments. Ukraine will slowly but surely follow this trend, but rather by narrowing the financial rights of its citizens than actually fighting corruption.
G20 now openly threatens with sanctions those countries that do not cooperate in terms of financial transparency and the fight against shell companies
The sharp decline in the volume of cash payments (such a measure is now being actively introduced in Europe, for example - in Germany), forced transfer of citizens to banking cards, and tightening control over the digital finance against the backdrop of the lack of infrastructure cashless payments will only worsen the overall situation. Besides, most of Ukraine’s population is only able to get by due to shadow payments.
In the meantime, Ukrainian citizens may still enjoy the active use of cash and relative freedom from banking supervision, which is getting closer to the Ukrainians.