What if there wasn't a dollar
What if there was no more cash?
Digitization is also advancing in the financial sector. Some countries are already approaching a cashless society - with far-reaching consequences. “Global Risk” therefore poses the speculative question “What if. . .? " for this and other topics.
Our scenario: Let's imagine a world in which cash no longer plays a role. The banknote printing plants have ceased operations, as have the mints. How does this happen? What began in Scandinavian countries like Sweden will eventually conquer the other countries and continents. The process is gradual: first of all, the issue of high-denomination notes (e.g. the 500 euro note) is stopped. Then cash payments will only be allowed up to certain maximum amounts.
With the argument of wanting to fight the shadow economy and crime, the banknotes and coins are ultimately denied legal tender status and are withdrawn from circulation. The “war on cash” has been decided, the cashless society is a fact.
A purely digital monetary system
The central banks experience the second major increase in power within a century. The first turning point was the collapse of the Bretton Woods order and thus the gold dollar standard in the 1970s; so the last remaining bond of money to a scarce precious metal disintegrated, so that its increase no longer had any natural limits. Comparable to this transition to pure fiat money (with no intrinsic value as with commodity money), the second cut leads to the complete digitization of money. The central banks no longer have any restrictions on interest rate policy either. You can have negative interest rates of 20% or 30% or more because the account holders are no longer able to physically withdraw their money from the commercial banks and keep it safe.
The abolition of cash will make protection against the erosion of financial assets almost impossible. An impairment can now be done by the authorities at the push of a button; it is no longer possible to escape into cash. But not only the central banks experience an increase in power. Access to its citizens' money is also becoming less complicated for the state. Because all financial assets can be viewed electronically at any time to the point and comma, the money is easier to tax. Due to the abolition of the zero interest rate limit, interest rates are also slipping deeper into negative territory, which means that the state is steadily making money by getting into debt. The result is an increasingly activist state and the suppression of private initiatives.
New forms of cyber crime
Financial privacy is no longer protected. Because all transactions are digital, every purchase leaves an electronic data trail. The consumption habits of the citizens are completely recorded and can be saved. The data protection laws cannot keep up with this development. The abusive sales of customer profiles are increasing. This has consequences. For example, health insurance companies refuse to insure people who buy high-calorie soft drinks. There are increasing blackmail attempts against people who can no longer keep confidential transactions secret - for example for a party donation or an HIV test. Hackers make lucrative business with such information.
The hope of effectively combating the shadow economy and organized crime with the abolition of cash is proving to be a pipe dream. It turns out that the effect was far overestimated in advance. Certainly, cash can be used in a criminal way; The same also applies to cell phones or cars, for example, without their being banned. In any case, it becomes clear that the digitization of all payment flows is leading to new forms of cybercrime. In addition, the criminal actors soon found substitutes for cash, such as cryptocurrencies, which are based on a blockchain with a decentralized network and guarantee their users complete anonymity.
Loss of the "shaped freedom"
The scenario paints a bleak picture of a cashless society. It is unlikely that things will come to this point in the foreseeable future. The digitalization of the monetary system will undoubtedly continue, which is definitely a positive because more cost-effective forms of storage of value or payment transactions are emerging. However, cash - once praised by Dostoevsky as “embossed freedom” - still has too many advantages for its end to be recognizable. From the user's point of view, these advantages include ease of use, better self-control, protection against expropriation, independence from a technical infrastructure, anonymity - and much more. When speculating about a digitized future, this bonus must not be withheld.
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What happened if . . .
Forecasting is difficult, especially when it comes to the future. As worn as the saying may be, it is just as accurate. The future can be approached in different ways: First, by using the past as the sole yardstick and drawing a straight line into the future. Second, many rely on their prognostic skills and bet everything on prediction. Or, thirdly, you plan in scenarios.
“Global Risk” is dedicated to the third way. Speculating about the future sharpens the senses and helps to adjust to eventualities, even if some scenarios seem far-fetched. In the first issue in the New Year we will be devoting ourselves to the question «What if. . .? " and set up pointed and speculative scenarios for three topics:
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