Global War on Cash

In the aftermath of Demonetisation in India in 2016, we at Asian warrior had written about global war on cash and heralding the era of Digital Currencies in detail. German economist Norbert Haring in his blog in days after Demonetisation in India in November 2019 alluded in his writings that the exercise in India to withdraw big percentage of cash denominations in India was sponsored from Washington DC. He wrote two articles; “A well-kept open secret: Washington is behind India’s brutal experiment of abolishing most cash” & “More evidence of early US involvement in Indian demonetisation” . The author comes to conclusion that corporate and philantro-capitalist interests in USA like Better than Cash alliance, Bill & Melinda Gates Foundation and USAID which signed an MoU with Ministry of Finance in October 2016 to promote cashless transactions with Catalyst were behind the whole exercise to promote cashless transactions while the ostensibly stated aim for public was crackdown on black money.

However subsequently the Indian economy was fully re-monetised with 500 Rs and a new 2000 Rs currency notes. The printing and circulation of 2000 Rs note had virtually stopped in past year or so and the circulation of the same is approximately to tune of 3.24 lakh crore that is nearly 10% of total currency value in circulation i.e. 32.4 Lakh Crores. On 19th May 2023, the Reserve Bank of India announced withdrawal of Rs 2000 denomination of currency and unlike 2016 has a given a large window to people to exchange or deposit them in banks till 30th September 2023. The RBI clearly stated that the said note will continue to remain legal tender till then. It however set a limit of exchange of Rs 2000 of note upto Rs 20,000 at one time. Since the currency being withdrawn was of higher denomination the common public hasn’t faced that much difficulty this time. Rs 2000 notes are easily being used at petrol pumps, kirana shops and pharmacies.

If this is not the classic way of demonetisation then what is the purpose of withdrawal of Rs 2000 denomination currency note. The RBI stated that Rs 2000 note was introduced in 2016 post demonetisation to quickly re-monetise the economy and since now the economy is sufficiently re-monetised and its circulation is down the said currency note is being withdrawn. However what is oblivious to public at large is that there is a global war on cash that has been launched on large currency denominations across various countries. The phasing out of Rs 2000 note is natural collary to to second phase of Demonetisation which was a flawed exercise replacing 1000 Rs with 2000 Rs note. Globally there is a trend to abolish high denominations of cash currency in circulation. This follows the policy directions from IMF to FATF which has churned out reports on higher denominations cash are used for criminal activities.

In May 2016, the ECB announced that the €500 note would no longer be issued from the end of 2018, due to ‘concerns that [this] banknote could facilitate illicit activities’. The impetus for this decision sprang from the intense desire within the EU to take decisive action on terrorist financing following the Paris attacks in 2015. The logic of ending the production of high-denomination notes such as the €500 was set out by Peter Sands and colleagues in February 2016 and was strongly supported by Europol.

The essence of the argument was that high-denomination notes are increasingly rarely used for legitimate purposes, yet are heavily used by criminals, since they enable large sums of cash to be moved, stored and transacted covertly. Although it is not the highest value bank note in the world (Singapore’s SGD 5,000 note (approximately £2,900) and Switzerland’s CHF 1,000 note (approximately £810) have higher value), the €500 has by far the largest outstanding stock – worth more than €300 billion – and there is ample evidence of its use in drug trafficking and other crimes.

While relatively few countries have introduced cash thresholds, many have well-established reporting requirements for cash transactions of certain types and values. Some countries have thresholds that apply only to transactions conducted with financial institutions, whereas others address high-value purchases from retailers and other businesses. Such reporting requirements have a dual purpose: first, they provide a record of such transactions to financial intelligence units (FIUs) and other law enforcement agencies; and second, by the very fact of requiring such a record, they make it more difficult for criminals to launder cash. In the Eurozone, €10,000 or equivalent must be declared when leaving or entering, and elsewhere in the world the threshold is typically the equivalent of $10,000.

But ultimately the whole Global War on Cash including on higher denominations of currency is disguised to promote Central Bank Digital Currencies. Whether be it Demonetisation or abolition of high currency notes; cash transaction limits. Its all a way to nudge people to adopt a new way of financial system. Cash is Still King, India has over ₹32.4 Lakh Crore Cash in Circulation with Public. Everyone knows about UPI, Cards. UPI is stop gap arrangement ultimately the aim is to push towards a Digital Currency. Ultimately all large denominations of currency will be phased out & they will nudge people towards Digital Currency. Its a global trend. Digital Rupee (e₹) - will be Distributed through Intermediaries such as Banks. It has thus fat been rolled out to Selected Users & Merchants in Limited Metro Cities.

The notion of black money in cash is highly exaggerated as there is no definite calculations of black money in cash. Black Money is something which you earn, do not disclose it to your Government and then use it to accumulate assets. This can be stored in Forex, Gold, Land, Benami Property, Gems & Jewellery. Cash is reportedly only 3% of black money. Even Demonetisation did not stop circulation of cash which is higher than pre demon levels. But equally digital transactions have gone up through UPI. So now to reduce volume of cash, nudge people further towards acceptance of CBDC is to abolish higher denomination of cash. And later on the Governments will frame law/rules barring high transactions in case imposing a threshold on the same.

In “The Macroeconomics of De-Cashing”, (2017) IMF-Analyst Alexei Kireyev recommends in his conclusions:

“Although some countries most likely will de-cash in a few years, going completely cashless should be phased in steps. The de-cashing process could build on the initial and largely uncontested steps, such as the phasing out of large denomination bills, the placement of ceilings on cash transactions, and the reporting of cash moves across the borders. Further steps could include creating economic incentives to reduce the use of cash in transactions, simplifying the opening and use of transferrable deposits, and further computerizing the financial system. 

The private-sector-led de-cashing seems preferable to the public-sector-led decashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee), but still needs policy adaptation. The latter seems more questionable, and people may have valid objections to it. De-cashing of either kind leaves both individuals and states more vulnerable to disruptions, ranging from power outages to hacks to cyberwarfare. In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash. A targeted outreach program is needed to alleviate suspicions related to de-cashing; in particular, that by de-cashing the authorities are trying to control all aspects of peoples’ lives, including their use of money, or push personal savings into banks. The de-cashing process would acquire more traction if it were based on individual consumer choice and cost-benefits considerations.

As de-cashing gives incentives to economies’ agents to convert their currency in bank deposits, the deposit base of the banking system will increase, which can help reduce the lending rates and expand credit.”

Coordinated efforts on de-cashing could help enhance its positive effects and reduce potential costs. At least at the level of major countries and their currencies, the authorities could coordinate their de-cashing efforts. Such coordinated efforts are, in particular, important in the decisions to phase out large denomination bills for all major currencies, to use ceilings and other restrictions on cash transactions, and to introduce the reporting requirements for cash transactions or their taxation. For currency areas, a single decashing policy would be clearly preferable to a national one. Finally, consensus between the public and the private sector and outreach on the advantages and modalities of gradual decashing should be viewed as key preconditions for its success.”

The IMF paper of 2017 actually tells how the countries across the world could approach decashing their economies to overcome the public resistance. Thus this push to abolish 2000 Rs note seems to be in consonance with FATF reports, IMF working papers & WEF agendas to nudge people towards adoption of digital money for high volume transactions. The public reason is to stop crime while the real reason is financial surveillance on public at large. Not to forget just like UK, USA, Australia; India too has a nudge unit established in the NitiAyog in the PMO with the help of Bill & Melinda Gates Foundation. The purpose of nudge unit designed on Richard Thaler’s theory of Behavioural Economics is how to convince or modify behaviour of people in choices made by the Governments which they believe are good for the people. I have covered that in my book #TheGreatReset (2022)

In my book in “The Great Reset” (2022) i have explained this transition from Global War on Cash towards digital transactions via UPI and other payment wallets and ultimately leading up to Central Bank Digital Currencies i.e. CBDCs which is as follows:

“From Pandemic Treaty to Climate Lockdowns to Vaccine Passports to Digital Currencies the whole thing is programmed to control the society in a totalitarian manner.

The WHO wants vaccine passports to be standardised and launched globally in 194 states and it has hired Deutsche Telekom subsidiary T-Systems as an industry partner to develop vaccination validation services and issuing QR codes every individual for their vaccination status. It is just like the system we have operational in India now or European Union. What makes it further more Orwellian is that as per BIS paper central banks across the world are doing trial runs of central bank backed digital currencies (CBDC) with Reserve bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and South African Reserve Bank. Augustin Cartens who is the general manager of the Bank of International Settlement (BIS) at the 2020 IMF summit had remarked, “We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000-peso bill today. The key difference with the CBDCs is the central bank will have absolute control [over] the rules and regulations that will determine the use of that expression of central bank liability, and also, we will have the technology to enforce that”.

On 9thMarch 2022, President Biden issued an executive order for development of US’s Digital Currency and regulatory framework to regulate private crypto currencies. India’s Finance minister in her Budget speech to the parliament of India on 1st February 2022 announced that Reserve Bank of India is going to rollout Digital Rupee in FY 2022-23575. China is already in the midst of deploying Digital Yuan and thus as countries across the world develop digital currencies it will take them on the SWIFT network and also reduce the dollar trade. te Bank of International Settlement has outlaid that CBDCs could lead to adoption of common regulatory guidelines of digital currencies among G-20 countries however the disputes of West with Russia & China make that prospect of happening bit farfetched for now. While CBDCs may not be an immediate threat to the dollar dominance globally, it is providing the blueprint of a new monetary order in te New Global Order. The CEO of BlackRock has recently opined that Russian invasion of Ukraine has put an end to globalization and there is large scale reorientation of supply chains which will have reactionary impact prompting countries to re-evaluate currencies and fast track digital currencies. China is already on the on cusp of launching the its digital Yuan and has integrated this with its social credit system whereby every activity of the individual is monitored and his currency spending limits could be curtailed by the state in case of any violations. Digital currencies could in future mean that central banks would get to know our payment behavioural patterns giving more powers to them which they could use to program our spending patterns with a social credit system for ethical conduct.

A similar suggestion was made by Bank of England to the chancellor of exchequer in UK about programming UK’s digital currency to limit its use by people for buying essentials only like an e-voucher. The House of Lords Economic Affairs committee has ragged these very concerns about UK’s BritCoin stating that, “these risks include state surveillance of people’s spending choices, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny, and the creation of a centralised point of failure that would be a target for hostile nation state or criminal actors.” Despite the objections of the Lord’s committee the Bank of England is proceeding with it. The World Government Summit 2022 held in Dubai had panelists talking about a new monetary order coming with Digital currencies & blockchain technology in coming times.

When the New Global Order is foisted on the world, we could see a new global reserve currency and digital currencies backed by the central banks which would keep a tight digital surveillance on individual, his activities and behaviour using AI induced algorithms. People’s access to financial freedom and their money could be restricted for what could be unacceptable behaviour for the governments. Imagine few decades down the lane you land up in a shopping arcade and at checkout your purchases are denied and message alert is flashed citing that your health record shows you are diabetic and hence you cannot purchase aerated drinks or sugar-coated candies. After this will be for common good or greater good for being an obedient subject of the state. This is exactly what China is already doing in social credit system which it is set to integrate with e-CNY (digital Yuan). Your health records are anyway being synced with your unique health IDs after Covid-19 so data mining will not be difficult.”

Thus it is amply clear that overall global agenda is to ban higher denomination of cash, cap high value transactions in cash and ultimately put the people on digital transactions in transitionary mode like cards, UPI etc while the central banks test and gradually roll out sovereign back digital currencies. However the concern that remains with digital currency is that every transaction over block chain ledger network will be monitored. Thus the central banks or the states through its legal power can restrict access to your digital money or even worse limit the money usage to specific items imposing restrictions on it. The state could thus act in orwellian manner whilist linking your access to digital money in wallets with the banks subject to a social credit system just like what China has done now.

“We must remember that human freedoms are not lost at one go but bit by bit in a bits and pieces meal served to you on a platter”