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The Greatest Problem Of A Cashless Economy – It Can Hit Harder Than What We Are Prepared For

The success, or failure, of the Demonetization will only become clear with hind-sight, but in the meantime, in order to fulfil our duty as an informed electorate, we must form our own opinions, which are to be based on more than just our adoration for our leader of any personal discomfiture caused by our government’s policies; our opinions must be based on facts.

While we understand most of the immediate goals of the campaign and the challenges associated with them, one of its long-term goals has not received as much light as the ones that are to affect us in the short-term. The very realisation of a move to a cashless economy will be monumental, but like all things great, a challenge of equal proportions, lies before we grasp the reward.

The benefits of a cashless economy range from those that would affect us at an individual level, such as prevention against petty theft, to those that would benefit society at large, such as making the funding of terrorism much harder, to those somewhere in between like maintaining an accurate record of all transactions and ensuring workers do in fact receive an accurate wages, and ensuring compliance with the minimum wage set by the government.

A cashless economy would function on the back of banks, which would regulate all monetary transactions, and banks unlike governments are not answerable to the general public.

One concern that exists even today is the lack of any law or regulation that would ensure the separation of commercial and investment banks. This means that banks can use the money deposited by its customers to not only give out loans but also make investments in order to turn a profit.

This means that when a bank makes a wrong investment, it losses not just its money but also that of its customers. In reality, losses from bad investments are recovered by the profits from the good ones, but there lies the possibility that a bank may loose so much money that it closes, and all its customers loose their money, and this has happened twice before, because of the lack of these very laws. The economic disasters that were the Great Depression of the 1930s and the 2008 Global Economic Recession which left people destitute and lives destroyed. While neither of these events affected India as dramatically, must we make a catastrophic mistake before we learn?

A cashless society would not immediately bring about such a disaster but with no money in liquid form, when this disaster occurs, it would be catastrophic.

It is that possibility, which is very real in our current system with the increasing reliance on cashless transactions and electronic wallets, that beggars not more, but better laws. The need of the hour is lawmakers who understand these systems and their flaws, and the technologies that will be the driving force in improving them.

It then becomes our duty to ensure that we are, each of us, always in the process of becoming better informed voters, a process that cannot end with any article.

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