The Bureau of Engraving and Printing produces 38 million notes a day with a face value of approximately $541 million USD. Printing, minting, and redesigning currency are all costly projects funded by the government through tax payer dollars. There are many costs associated with possessing physical money including the cost of maintaining the currency itself. Negative interest rates are difficult to achieve and require much more than simply going paperless but would give governing institutions the help they need in times of financial crisis.Īnother reason for why keeping cash is a burden is the existence of hidden costs. Moving to a cashless economy could allow central banks more flexibility to push the interest rates as negative as preferred to induce an expansionary monetary policy during a recession or depression. It is highly difficult to push interest rates into negative areas as vast amounts of cash are hard to maintain. In Switzerland there exists 30 year bonds that offer negative interest rates directly contending the Swiss franc with the euro system in place. In recent years there has been some success in European countries with negative interest rates. Harbouring money keeps it from being utilized for investments and has some effect in impeding the economic expansion.ĭue to slow growth of the Canadian economy many are looking at alternative ways to stimulate expansion. It has been proven that people would rather hold cash in their closet than place it in assets such as bank CDs and treasury bills offering 3-5% interest. By withdrawing the money it is removed from circulation and a central function of banks is rendered useless. The purpose of financial institutions is to bring people who have money but no time to create businesses and connect them with people with spare time and capabilities to create businesses but lack liquid capital. Currently, people are simply able to withdraw any amount of money they possess and take it out of circulation by keeping it in their homes. One key reason for the removal of physical currency is the incentive that if all money is held in financial institutions then people would be forced to invest their money. Stimulating the Economy and Negative Interest Rates What are the benefits of completely digitizing currency and what are the costs of abandoning our existing system? Money is often sorted through intermediaries and many trades and investments are made without actually physically seeing any coins or bills exchanged. The reason why speculations regarding going paperless is more prominent than ever is due to the fact that we live in a virtual society. Currency has been the fundamental pillar in our monetary system and has given rise to trade and investment. Recently, there has been great speculation on the benefits of going paperless once and for all.

Money as we all know is an important unit of account and an essential tool for trade.

Paperless post coins to dollrs