
Austrian Minister Calls for a Constitutional Right to Pay in Cash - randomname2
http://www.bloomberg.com/news/articles/2016-02-12/austrians-need-constitutional-right-to-pay-in-cash-mahrer-says
======
cesarb
Everybody in these discussions always mention privacy, but there's an equally
important consideration which seems to be often forgotten: reliability.

With electronic forms of money transfer, both the sender and the receiver need
to have an account with some entity. There have been cases where pressure has
been put on these entities to close someone's account, like for instance
[https://www.eff.org/deeplinks/2015/07/caving-government-
pres...](https://www.eff.org/deeplinks/2015/07/caving-government-pressure-
visa-and-mastercard-shut-down-payments-backpagecom) . With cash, there's no
risk of someone closing your account, since it doesn't need one.

And, of course, there's the fact that all working electronic forms of money
transfer I've seen are online; if the network is down, you can't do anything.
Cash is offline.

~~~
icebraining
As far back as 1995, the association of banks here in Portugal created the PMB
("Porta-moedas Multibanco") which was a chip-and-pin card made for small
transactions, and which didn't require neither a bank account nor an Internet
connection to pay for stuff.

One would load it on either an ATM (using your regular debit card) or an
authorized shop (using cash), and the card itself would store the balance.

They eventually discontinued in 2006, since it didn't really caught on.

~~~
th0br0
We have a similar system here in Germany (established in 1996) [1]. Still up
and running and widely in use! (i.e. 141,2 million EUR loaded onto cards,
118,4 million EUR spent with the cards in 2013, see the German wikipedia page)

[1]
[https://en.wikipedia.org/wiki/Geldkarte](https://en.wikipedia.org/wiki/Geldkarte)

------
HappyTypist
With negative interest rates becoming more prevalent and the IMF calling for
the abolishment of cash to allow levying negative interest rates on all
balances, I think it's perfectly valid to want a right to pay in cash.

On the other hand, negative interest rates have been prevalent for all of fiat
history, thanks to monetary base and commercial bank money inflation. Negative
nominal rates only make it more explicit.

~~~
RobertoG
"Negative nominal rates only make it more explicit."

Not really. Inflation happens when there is a real resources constrain. You
are demanding more from the economy that the economy can produce. If you have
doubts about this, just look into the result of the QE programs that have
generated not inflation.

Negative rates don't need this condition and don't make really sense. First
they push money in the system and then they pull money from the system, but
everything continues the same.

In fact, negative interest rates can be seen as a way of avoiding doing the
logical thing: fiscal policy and direct investment.

------
jmnicolas
What we need is not the right to pay in cash but the right to pay anonymously.

In fact we need a broader constitutional right of privacy.

~~~
_yosefk
IMO simpler is better. A legal guarantee for anonymity that might end up being
backed by complex technology is worse than a legal guarantee that you can pay
with paper money regardless of anonymity. That's because paper is less likely
to have an unnoticed back door (what anonymity does Bitcoin provide if your PC
is running a keylogger?)

In fact this makes me think of all the nice things we could have if support
for simple mechanisms was legally required in various areas of life.

~~~
ozim
You are right, and that is why for instance online voting does not get serious
attention. It is far easier to implement all requirements with pen and paper.
First one that your vote should be known only to you. I would not trust any
computer based voting software. I can easily imagine next day some sad people
could come over to my place and question me why I voted for wrong person.

~~~
eru
Yes. Electronic voting can be made anonymous and secure, but only an expert
would be able to verify (or even understand) that.

Everyone can understand pen and paper voting.

------
DominikR
A few reasons why banning cash is a bad idea:

1) When you get into financial trouble and are unemployable for some reason,
there is no way for you to earn something on the side so you can feed your
family and pay the bills.

You can only submit to social services. There was one case in Germany where
social services threatened a women to cut off the payments if she didn't take
a job as waitress in a brothel. This is an extreme example, but you get the
idea why it is a always a bad idea to be dependant on some bureaucrat.

2) The only ways to earn money or trade is to take a job or create a business.
As it happens the government controls what types of jobs and businesses are
allowed. This is also bad for businesses as not every startup is being run
from the very beginning like a serious business following all regulations.
Often it is a side business that develops into something bigger.

3) A group of politicians decides to run a media campaign to demonise a
certain profession or type of business. You can now expect that you get a
special XX% tax or loose your money because how could you dare to be
successful.

4) I imagine it is very nice for power hungry officials to know about every
payment made and received by every citizen. Did you ever buy something (of
course legal) that you wouldn't like everyone to know about? Well if you do
something they don't like this might end up in the public.

5) it gets very hard to invest money in a way that prevents you from being
taxed arbitrarily by the government. (for example haircuts) Even if you bought
physical gold the government would know about this and demand you to give them
a share.

~~~
randomname2
Also, from [https://www.linkedin.com/pulse/cashless-society-erico-
matias...](https://www.linkedin.com/pulse/cashless-society-erico-matias-
tavares)

Pros:

\- Enhance the tax base, as most / all transactions in the economy could now
be traced by the government;

\- Substantially constrain the parallel economy, particularly in illicit
activities;

\- Force people to convert their savings into consumption and/or investment,
thereby providing a boost to GDP and employment;

\- Foster the adoption of new wireless / cashless technologies.

Cons:

\- The government loses an important alternative to pay for its debts, namely
by printing true-to-the-letter paper money. This is why Greece may have to
leave the euro, since its inability or unwillingness to adopt more austerity
measures, a precondition to secure more euro loans, will force it to print
drachma bills to pay for its debts;

\- Paper money costs you nothing to hold and carries no incremental risk
(other than physical theft); converting it into bank deposits will cost you
fees (and likely earn a negative interest) and expose you to a substantial
loss if the bank goes under. After all, you are giving up currency directly
backed by the central bank for currency backed by your local bank;

\- This could have grave consequences for retirees, many of whom are incapable
of transacting using plastic. Not to mention that they will disproportionately
bear the costs of having to hold their liquid savings entirely in a (costly)
bank account;

\- Ditto for very poor people, many of whom don’t have access to the banking
system; this will only make them more dependent, in fact exclusively
dependent, on government handouts;

\- We wonder if the banks would actually like to deal with the administrative
hassle of handling millions of very small cash transactions and related
customer queries;

\- Illegal immigrants would be out of a job very quickly – a figure that can
reach millions in the US, creating the risk for substantial social unrest;

\- If there is an event that disrupts electronic transactions (e.g. extensive
power outage, cyberattack, cascading bank failures) people in that economy
will not be able to transact and everything will grind to a halt;

\- Of course enforcing a government mandate to ban cash transactions must
carry penalties. This in turns means more regulations, disclosure requirements
and compliance costs, potentially exorbitant fees and even jail time;

\- Banning cash transactions might even propel the demise of the US dollar as
the world’s reserve currency. The share of US dollar bills held abroad has
been estimated to be as high as 70% (according to a 1996 report by the US
Federal Reserve). One thing is to limit the choices of your own citizens;
another is trying to force this policy onto others, which is much harder.
Foreigners would probably dump US dollar bills in a hurry and flock to
whichever paper currency that can offer comparable liquidity.

~~~
DominikR
> \- Force people to convert their savings into consumption and/or investment,
> thereby providing a boost to GDP and employment;

So we shall all sacrifice our private property rights. There is stuff I own
and I do not care if someone wants to take it for the GDP. It is mine and it
will have to taken by force.

I have to say coming from a former communist country I'm really sickened by
the Socialist direction Western countries are taking today.

------
lifty
I am suspicious of their motives. They say it's to curb illicit trade using
anonymous cash but I'm suspecting they will like the side effects of removing
cash. People wouldn't be able to do bank runs as easily which would give even
more leverage to the central financial planners using techniques like negative
interest rates. I really think cash shouldn't be abolished until we have a
decent alternative(maybe some crypto currency).

~~~
x5n1
Motives are irrelevant, I think all the nut jobs that have been saying this
for years, that the government wants to take away people's right to cash have
been right all along.

------
moonshinefe
I wouldn't bet any money on Western governments guaranteeing anonymity when it
comes to electronic payments in this day and age. If such protections can be
granted to cash, that'd be a win, in my opinion--even if it isn't a complete
solution.

------
a3n
Without cash, how will you give money to beggars?

~~~
icebraining
By giving gift cards backed by an SV startup, of course!

[https://handup.org/giftcards](https://handup.org/giftcards)

------
neximo4
Cash is underappreciated today in the name of terrorist financing and etc.

Its easy to give to someone to buy stuff for you or pay them back or save up
pieces.

Electronic cash can't do everything it can do with as much simplicity.

Admittedly with larger amounts there's no doubt to the electronic system.

In Sweden its kind of frowned upon to pay in cash, which is weird.

~~~
winter_blue
> _Its easy to give to someone to buy stuff for you or pay them back or save
> up pieces._

I can do all of these things with Venmo, PayPal, Google Wallet, etc.

> _Electronic cash can 't do everything it can do with as much simplicity._

I find those online tools a lot easier to use and less cumbersome than cash.

~~~
neximo4
I don't. The other person needs to have these things, as does the
intermediary.

Bet you removing $10 & handing it over from my pocket beats all these in a
time test.

While its cool to use those, not always. UK banks are nice in the sense you
can transfer instantly/free but its more of a hassle entering the account
number in (which isn't really that hard, but handing over cash is much
easier).

------
rnnr
It's amazing what has been written for public cameras and their privacy issues
when at the same time your lovely government wants to know all your domestic
purchases or even you to report them incomes you receive in other countries.

~~~
x5n1
And yet still forces you to file their taxes, despite having all the
information available to them to simply send you a bill at the end of the
year.

------
LoSboccacc
I'm conflicted. Bags of cash are also the preferred way to conduct shady
business. I think some cash flow limit from each account would work better
than a classic either/or solution.

~~~
venomsnake
> Bags of cash are also the preferred way to conduct shady business.

That is police's problem. I am tired of LEO offloading their duties and costs
of business to society.

~~~
LoSboccacc
ehm, then again, who pays for police?

~~~
venomsnake
This way I am paying twice. Once for the police work, once with my privacy. If
police cannot do their job - we disband them and create something better in
their place.

------
rrockstar
I wonder if the minister wants this right to be enforced at every shop. Should
I _always_ be able to pay cash for goods/services? What if I buy something
online?

Card payments also have many upsides besides ease of use for the customer.
Currently the Amsterdam transport company is planning to disallow cash
payments in buses because of the many armed robberies of bus drivers.

------
randomname2
This proposal may be due to the increased calls to ban cash:

\- Bloomberg: Bring on the cashless future [1]

\- FT: The benefits of scrapping cash [2]

\- Bloomberg: Europol Director Sees Case for Scrapping High-Value Banknotes
[3]

\- Handelsblatt: The death of cash [4]

\- Norway's Biggest Bank Calls For Country To Stop Using Cash [5]

\- Spiegel: Leading German Economist Calls For Cash Ban [6]

\- Bloomberg: Citi Economist Says It's Time to Abolish Cash [7]

\- Telegraph: Bank Of England Chief Economist Calls For Cash Ban, Urges
Negative Rates [8]

And from a Morgan Stanley presentation, in which its head of EMEA equity
research Huw van Steenis, points out [9]:

"What I learned at Davos: We should move quickly to a cashless economy so that
we could introduce negative rates well below 1% - policy maker"

..adding: "One of the most surprising comments this year came from a closed
session on fintech where I sat next to someone in policy circles who argued
that we should move quickly to a cashless economy so that we could introduce
negative rates well below 1% – as they were concerned that Larry Summers'
secular stagnation was indeed playing out and we would be stuck with negative
rates for a decade in Europe. They felt below (1.5)% depositors would start to
hoard notes, leading to yet further complexities for monetary policy."

[1] [http://www.bloombergview.com/articles/2016-01-31/bring-on-
th...](http://www.bloombergview.com/articles/2016-01-31/bring-on-the-cashless-
future)

[2]
[http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e...](http://www.ft.com/intl/cms/s/8ef4dcb0-ca6f-11e5-be0b-b7ece4e953a0,Authorised=false.html?siteedition=intl)

[3] [http://www.bloomberg.com/news/articles/2016-02-08/high-
value...](http://www.bloomberg.com/news/articles/2016-02-08/high-value-
banknotes-should-be-binned-to-fight-crime-sands-says)

[4]
[https://global.handelsblatt.com/edition/354/ressort/finance/...](https://global.handelsblatt.com/edition/354/ressort/finance/article/the-
death-of-cash)

[5] [http://www.ibtimes.com/norways-biggest-bank-calls-country-
st...](http://www.ibtimes.com/norways-biggest-bank-calls-country-stop-using-
cash-2276140)

[6] [http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-
bofi...](http://www.spiegel.de/wirtschaft/soziales/bargeld-peter-bofinger-
will-muenzen-und-scheine-abschaffen-a-1033905.html)

[7] [http://www.bloomberg.com/news/articles/2015-04-10/citi-
econo...](http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-
says-it-might-be-time-to-abolish-cash)

[8] [http://www.telegraph.co.uk/finance/bank-of-
england/11874061/...](http://www.telegraph.co.uk/finance/bank-of-
england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-
economy-says-Bank-of-England-chief-economist.html)

[9] [https://imgur.com/qnEwiha](https://imgur.com/qnEwiha)

------
tumdum_
It's a pity that franc is no longer backed by gold.

~~~
efesak2
Is there usable currency which is actually backed by gold?

~~~
Tepix
There are various coins made from silver or gold that are also valid currency.

For example all German 10 euro silver coins that were released between 2007
and 2010 are made from 18g sterling silver.
<[https://en.wikipedia.org/wiki/Euro_gold_and_silver_commemora...](https://en.wikipedia.org/wiki/Euro_gold_and_silver_commemorative_coins_\(Germany\)>)

After 2010, the silver price got too high so they first reduced the amount of
silver in the coins to 62.5% and then got rid of the silver entirely.

With the current price of silver the silver in the coins is worth $8.158 (it
was worth more than 10€ for a while).

~~~
tumdum_
There is also WIR
[https://en.wikipedia.org/wiki/WIR_Bank](https://en.wikipedia.org/wiki/WIR_Bank)
which is backed by assets, but I think it's not targeted at individuals.

------
chvid
I am kinda hoping for things to go the other way.

Let anyone (any person, any company) have an account in the central bank and
use that directly for payments. Let that and only that be "legal tender".

Then there would be no need for the government to do costly guarantees for
depositors in private banks, no need for cash, no need for a costly blockchain
and so on.

Taxes could be collected much fairer and efficient.

Negative interests rates could be implemented without distortions.

~~~
ptaipale
I'm not one of the trolls who oppose all taxation, but statements like "Taxes
could be collected much fairer and efficient" scare the hell out of me.

One fundamental thing about taxes is that, when enforcement of each and every
law is not totally possible, totally unfair taxes are also not possible.

What you propose is totalitarianism, or eventually leads to it.

~~~
chvid
No. I am just proposing a less bureaucratic totalitarianism.

~~~
ptaipale
What I'm afraid is less bureaucratic and more efficient totalitarianism. The
bureaucracy may actually be a safety mechanism: the government can't go to the
extremes because it'd be buried in paper.

Whereas in electronic surveillance and control...

