To combat Indian savers’ attachment to cash and distrust of banks, Soumya Kanti Ghosh, the group chief economic adviser of the State Bank of India (SBI), the largest bank in the country, proposed that the government should ‘surprise’ Indians with cash bans on an ongoing basis, so as to discourage people from holding cash.
The effect of the present Indian demonetization effort has been chaos, with at least 47 Indians reported dead in the aftermath due to queueing at banks and other factors.
Earlier this year, Harvard professor Kenneth Rogoff had demanded a ban on US $20 and higher denomination bills, while insider Larry Summers had recommended banning the $100 bill.
If these academics have their way, government-backed paper money will further approach its intrinsic value – zero. They hope that this will drive cash-based savings into bank deposits, which generate fee revenue and a source of leverage for the banks while at the same time supplying governments with taxes and police oversight of citizens’ financial lives. However, governments attempting to eliminate cash usage risk destroying trust in the ‘coin of the realm’, leading to cash-based savings being moved into assets such as real estate, precious metals, and cryptocurrencies instead of bank deposits.
But the ubiquity of cash clearly persists, even in the US:
Tip Freedomwat.ch Staff with Bitcoin