Why you can never be paranoid enough: Downing Street's plans to complete the war on cash

When we talked of the “war on cash” many accused us of being paranoid. But Downing Street’s plans for a cashless society went far beyond what we feared, says Merryn Somerset Webb.


Abolish cash and the state can take interest rates as negative as it likes
(Image credit: 2017 Getty Images)

Last year, MoneyWeek wrote quite a lot about what we called the "war on cash" the way in which central banks and governments seem determined to stop us using actual cash for any transactions at all.

We noted the way in which cash transactions over a few thousand euros were outlawed in much of Europe; we watched the way in which the €500 note was demonised as being the note of choice for all manner of criminals; observed that the Bank Of England website has no timetable on it for the introduction of a new £50 note; and reported at length on a speech in which the Bank's chief economist Andy Haldane reflected on how much easier modern monetary policy would be if only people were forced to stop using cash.

Lots of you accused us of mild paranoia. Turns out we weren't anywhere near paranoid enough. The deputy head of Downing Street's policy unit, Daniel Korski, put forward a pretty radical proposal on the matter.

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The aim is to make the UK an entirely cashless society by 2020 with a view to stopping it fuelling the criminal economy; pushing up productivity; and making the UK "the centre for innovation for money in the future".There's a large body of thought that reckons this is a pretty good idea after all, cash does facilitate crime to a degree (although I can't imagine that without it there would be less crime).

But it is worth remembering the two main reasons why abolishing it is a bad idea.The first is that it removes all privacy: without cash you can never buy or sell a thing or a service without anyone knowing about it. The second is that it opens up the way for the state to confiscate your cash at will. One of the reasons why it is hard to make negative interest rates work (ie to get away with effectively charging people for bank deposits) is that, when pushed, people demand bank notes and store them elsewhere (see my previous blogs on this).

Abolish cash, force everyone to keep their money in digital accounts at the central bank and that problem is gone: the state can take rates as negative as itlikes in the happy knowledge that there is nothing the general population can do about it.The last financial defence of the individual against the state is gone. That (for the avoidance of doubt) is not a good thing.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.