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Abolish currency.
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Tax currency.
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Remove the fixed exchange rate between currency and central bank reserves/deposits.
Before looking at the practicalities of abolishing currency, we should first look at whether it could ever be necessary. Due to the costs of holding large amounts of cash, Buiter puts the actual nominal rate at which the move to cash makes sense as closer to -100bp. So, in order for a cash abolition to become necessary, central banks would need to be in a position where they wished to set nominal rates much lower than that.
Buiter does not have to go far to find an example of where a central bank may have wanted to set interest rates much lower to -100bp. He uses (a fairly aggressive) Taylor Rule to show that Federal Reserve rates should have been as low as -6 percent during the financial crisis.
It seems Buiter is correct: Sometimes strongly negative nominal rates are called for.
Buiter is aware that his idea may be somewhat controversial, so he goes to the effort of listing the disadvantages of abolishing cash.
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Abolishing currency will constitute a noticeable change in many people’s lives and change often tends to be resisted.
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Currency use remains high among the poor and some older people. (Buiter suggests that keeping low-denomination cash in circulation — nothing larger than $5 — might solve this.)
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Central banks and governments would lose seigniorage revenue.
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Abolishing currency would inevitably be associated with a loss of privacy and create risks of excessive intrusion by the government.
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Switching exclusively to electronic payments may create new security and operational risks." BloombergBusiness