Jun 24, 2009

Will Japan be the first country to abolish cash?

Many countries will need to fight deflation and, as suggested by Buiter, this can be done by introducing negative interest rates and abolishing currency.

Why would Japan be the testing ground? "Richard Jerram, a senior economist with Macquarie bank, told investors that “the proposal has become practical with the broad penetration of electronic money and credit cards in Japan”...Japanese could easily make the leap into a cashless world. The country has six main competing cashless payment systems, many of them embedded into mobile phones. Including Oyster-type cards issued by public transport companies, industry sources estimate that there are about 120 million cashless payment chips sitting in Japan’s wallets and handbags, waiting to be swiped."

Is the end of the cash era still pure fiction? I would like to see it happen, but I'm still wondering...wouldn't all money flow out of the country, where interest rates are still zero or above?

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