An Argument on Abolishing Physical MoneyWhy Should Cash Be Kept for Longer?

Abstract

 In today’s increasingly digitalized world, physical objects are fading away; physical money is no exception. The role of cash—both bills and coins—is steadily diminishing, challenged by fintech innovations that threaten its very existence, marking a potential turning point in the history of money. The rise of centralized and decentralized digital payment systems is reshaping the financial landscape, reinforcing the shift toward digital alternatives. Notably, China and Sweden, the first countries to introduce banknotes, are piloting the cash alternative project. Other countries are withdrawing high-value banknotes. Amidst this transformation,  a heated debate continued between advocates for maintaining cash circulation and skeptics who fear its imminent demise. This paper critically argues common issues such as tax evasion and the facilitation of the shadow economy, exposing the underlying unfairness in these claims, especially as the push for greater transparency has become a settled issue. It then presents counterarguments that support the authors perspectives. Furthermore, the study delves into key questions surrounding cash’s future: is it truly on the brink of extinction, or should it coexist with digital payment methods? Most importantly, should cash be retained for a longer period, or has it outlived its usefulness?  To maintain focus, this paper will focus on the internal considerations over international ones. CBDCs emerge as the primary alternative to physical cash. The paper does not address the sufficiency or implementing challenges of CBDC.