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The abolition of cash and evolution of a cashless society

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How can the abolition of cash fight inflation and reduce unemployment?

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Solution Summary

The abolition of cash and evolution of a cashless society is traced historically and aligned with modern times.

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Introduction:

The abolition of cash and evolution of a cashless society was first envisioned by Edward Bellamy who noted that by 2000, the world would be a cashless society. With Japan's move towards abolishing cash and implementing a cashless society, a heated discussion on the benefits of such a system and its impact on the macroeconomic variables have been the centre of major discussions among scholars (Technovelgy, 2009). This paper evaluates how abolition of cash can fight inflation and reduce unemployment.

How abolition of cash can fight inflation and reduce unemployment:

The abolition of physical cash is one of the highly controversial topics of the decades with various players pointing out the benefits and costs of a cashless society. Abolition cash can play various roles in fighting inflation and in effect also lower rates of unemployment. Without physical cash, the central monetary authority in country, that is the Federal Reserve, can set rates of interests as it wills. This is based on the fact that with physical cash is a bond with interest rates that cannot go beyond zero. While it is possible for the Federal Reserve to impose negative or positive rates of interest on non physical assets such as treasury bills or bond, doing the same wit the ...

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