Why Eliminating Cash Would Harm the Market Economy

Monetary authorities increasingly argue for eliminating physical cash altogether, citing tax evasion, the shadow economy, and the instability caused when people run for cash during a crisis. But money is a commodity that emerged through voluntary market selection, not something a central bank can conjure by decree, and abolishing cash strikes at the medium of exchange itself, pushing the economy back toward the inefficiencies of barter.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

According to certain experts, there is an urgent need to remove cash from the economy. It is argued that cash provides support to the shadow economy and permits tax evasion.

Another justification for its removal is that, in times of economic shocks which push the economy into a recession, the run for cash exacerbates the downturn (i.e., it becomes a factor contributing to economic instability). Moreover, it is held that, in the modern world, most transactions can be settled by means of electronic funds transfer. Money in the modern world is an abstraction.