Comments on: The War on Cash?

By: Adam

Adam — Thu, 17 May 2007 17:18:26 +0000

Are banks required to deal in cash, or is it a feature customers want?
In the US, ATMs may or may not be fee-free. Depends on the bank. (Fee free is also a misnomer, given that most current accounts don’t pay interest..)

By: Dave Birch

Dave Birch — Wed, 16 May 2007 15:46:44 +0000

In the UK, as in many other countries, consumers do not pay for cash. If I get money out of an ATM, it doesn't cost anything. Banks lose several billion euros on cash in Europe. So cash (and cheques) are subsidised: consumers do not pay the full cost. More on this here... http://digitaldebateblogs.typepad.com/digital_money/2006/05/the_cash_menace.html

By: Adam

Adam — Wed, 16 May 2007 12:42:47 +0000

I’m not sure I do see what you mean by cross-subsidised. Could you explain?

By: Dave Birch

Dave Birch — Tue, 15 May 2007 16:23:18 +0000

Aren’t two different things getting mixed up here? It isn’t a debate about whether money should be issued by the government or by private industry, it’s just a debate about whether the use of notes and coins that are issued by the government should be cross-subsidised, if you see what I mean. As for traceability, I have consistently argued that we should (as society) choose a limit and stick to it, whether its $50 or $5000, so that low-value payments become cheaper and available to everyone because they can be exempted from AML/KYC and other expensive: I have never argued that cash should be replaced only by bank-issued credit and debit cards.
I do agree with you about the rules, though. The way forward is by providing space for more competition and more innovation.

By: Adam

Adam — Tue, 15 May 2007 14:09:03 +0000

Ian,
Having the government issue cash provides an (ahem) default system. That doesn’t mean others shouldn’t be allowed to compete. As you point out, the competitive space is strangely shaped by rules, and simply removing cash while leaving other rules in place isn’t making for free competition in payment systems.

By: Iang

Iang — Tue, 15 May 2007 13:58:30 +0000

yup! (manual trackback) although I’m mystified on your apparent anti-FC stand!