A Cash Ban Has Already Begun…
Central banks hate cash so much that they may try to ban it. Almost all the ‘wealth’ in the financial system is digital in nature. Physical cash (bills or coins) comprises less than 1% of the ‘money’ in the financial system. The benchmark for risk-free money in this system is not cash, but US Treasuries.
Central banks like that, because if investors/depositors ever tried to convert even a small portion of this ‘wealth’ into actual physical bills, the system would implode.
When the 2008 crisis hit, central banks feared that investors would flee digital wealth for the comfort of cash. Indeed, the financial system was close to collapse when depositors attempted to pull $500 billion out of money market funds.
When it happened, the world’s central banks realized that their worst nightmare could become a reality: if a significant percentage of investors/depositors ever tried to convert their ‘wealth’ into cash, the whole system would implode.
As a result, almost all the Fed’s actions since 2008 have been aimed at forcing investors away from cash and into risk assets. The most obvious move was cutting interest rates to 0.25%, so the return on cash became insignificant.
After all, if cash returns next to nothing, anyone who doesn’t want to lose their purchasing power is forced to seek higher yields in bonds or stocks.
The Fed expected the US economy to come roaring back, but that hasn’t happened despite ZIRP for five years and three rounds of QE. As a result, mainstream economists have suggested doing away with cash entirely.
It’s already happening in other countries. France has banned cash transactions over €1,000. Spain has banned cash transactions over €2,500. Uruguay has banned cash transactions over $5,000.
This will come to the US in the near future. Already the big banks (the ones with the closest ties to the Federal Reserve) have begun turning away deposits, or charging for them.