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Scrapping cash: don’t let the banks coin it

Smuggled into Rogoff's proposal to axe cash is the privatisation of the currency. Let's cling on to our notes, until publicly accountable central banks are ready to create digital reddies

By Fran Boait   October 2016

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The proposal to abolish cash has a certain superficial appeal, but—even before we get to the myriad practical problems—it could turn out to smuggle in a dangerous agenda of stealth privatisation. Kenneth Rogoff’s argument that we can simply abolish physical cash and switch to using electronic money, completely misses one crucial difference between the two—the institutions that create them.

“Electronic money”—that is, the numbers in your bank account, which change every time you spend on a debit card—are not fully equivalent to physical cash. They’re actually IOUs, or deposits created by banks…

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