Tuesday, November 08, 2011

The high cost of cash

We have elected and pay for decision makers and regulators. Sometimes I get the impression that they try to govern as little as possible in important areas and overcompensate with irritating nitty-gritty.

An area where actions certainly is needing is in the fight against cash usage - at least for the following reasons:

1. Cash is expensive - according to EU-study cash-handling costs 50bn a year - and the consumer pays every cent of it. The problem is that she/he does not know it as the cost is hidden. Action point: Make cost visible by charging charging for withdrawals and usage.

2. Cash is an open invitation to crime. Be it drug dealing, illegal weapons, prostitution, gambling, black economy, grey economy, counterfeit, robberies, blackmail - you name it. If cash usage would be made difficult, an unusual and expensive practise - what would happen to crime?

Action point: Make the cost of all this (including crimeprevention, courts, jail systems - not to talk about costs to the victims) very clear to citizens.

3. Cash is the vehicle for not paying tax. The VAT-gap in EU in 2009 was 118,7bn. Much of this is due to avoidance schemes and politically motivated rather silly exceptions - but the fraud part is much dependent on cash (and paper/e-mail invoicing).

Action point: Make it clear that this is our - the tax payer's badly needed debt reduction money - being lost. Make e-invoicing and credit payments mandatory. Salaries and social benefits can be paid only to accounts (every identifiable person should have the right to a bank account and a direct debit card at decent cost).

4. Cash is CO2 heavy. How much CO2 does not the daily armoured car parades (out and in again) emit + printing and destroying vast amounts of paper.

Action point: Make the CO2 amount visible on global/EU/country levels and tax it.

When will investigating media notice this anacrony - using cash even in places where there are many alternatives - only because the many cost dimensions to society and the users are not known. Put the light on this - instead of being tools for populists protesting about handling charges becoming transparent (sic!). Media should also reveal how consumer organizations often are doing their best to protect old and create new unnecessary costs - instead of truly protecting consumer longer term interests.

Then the politicians might get the nerve to do something bolder about it.


pdidenko said...

Cash is slow - it takes a lot of time to move cash from one place to another - this slows the whole economy.

BoHarald said...

This is one more reason to promote both transparent pricing of cash usage - and even move to steering pricing.