ABOLISHING CASH IN EUROPE: THE BENEFITS AND DRAWBACKS OF ELECTRONIC TRANSACTIONS

Many proposals favouring cash abolition have emerged over the past few years. Their economic and social impact has not yet been analysed in depth. 
This paper aims to present the evolution of the means of payment during the last decades and to analyse the issue of cash abolition in European economies. The creation of a cashless economy would bring benefits, such as efficiency increase, as well as problems: the disturbance of money supply, instability of the foreign exchange rate, and so on. 
The paper discusses the reasons and arguments expressed by supporters and opponents of cash abolition and focuses on possible consequences, from the economic point of view. The advantages, disadvantages, benefits and costs associated with the possibility of removing cash from the economy are also described. Finally, a possible scenario for the future is analysed. 
Keywords: Monetary Policy, Financial Markets 
JEL: E44, E50


Introduction coins) in daily transactions
eral electronic alternatives in areas where cash has traditionally been used.The second -2 -3 4 The term "cash" in this paper refers only to physical banknotes and coins issued by the central bank.

t F Financial Market F Financial Marke et
funds transfer, use of an electronic wallet, etc.).In the second case, the state prohibits of payment.It is possible that in future citizens without a bank account and a credit card only way forward, and cash has lost its role in our modern society.decades and to analyse the issue of cash abolition in European economies.We try to nected to cash abolition?

Cash and non cash transactions
-cash transactions caused by payment in cash can be motivated by a wish to protect stand.This property is of special importance for older people and children.Cash, in contrast to other means of payments, does not require any technical infrastructure in increases liquidity, since transferred funds are immediately available.Usually, cash is a widely accepted means of payment in all parts of society.It is also a fast method of of transaction at the same location.Cash, however, is costly since it must be produced, transported and stored.In addition, cash exposes people to the risk of theft, as well cash.Cash is also seen as a labour intensive form of payment since it requires for exand limits consumption to the amount of money which people possess at the moment of transaction.Some of the above properties apply only to cash and some are common with electronic payment solutions. -

The advantages of cash abolition
bank to bankruptcy.In the absence of cash, this problem will disappear.

costs.
help combat these phenomena.cash is the end of "under the table" payments made in order to avoid taxes.Eliminatway, since the 500 euro banknotes are not too heavy, while they do not occupy much therefore continue to be used as a payment instrument.
to lose the object of their activity.

The arguments against the elimination of cash
consolidation of a bank.A typical example is that of Cyprus, where for the consolida-With the abolition of cash, household and business access to their money is restrictother words, locked up in bank accounts and under the constant threat of a possible places, such as safe deposit boxes.Withdrawal of money can also stem from the money from banks.The Greek monetary authorities, in order to protect the Greek The elimination of cash also allows commercial banks to require account-mainte-mattress" or in other secure places.This has happened in Greece with the recent from their bank accounts before the banks shut down.volume of electronic transactions, at the expense of cash transactions, should also be mentioned.Financial service providers will also be able to require traders to pay tacks, which are likely to create enormous problems and chaos in economic activity.

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almost solely pay by means of cash.In Denmark and Sweden cards are most used,

Figure 1 .
Figure 1.Payment instruments distribution: cash and non cash per country (EU27) periods of economic recession, borrowers are unable to service their debt With a possible abolition of cash, commercial banks will invest far more openly in would lead to a lack of bank liquidity and bankruptcy.They will also not need to mainas data collection by commercial companies.If cash disappears, privacy and personal data protection, while others do not even deserve it.