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Targeting Cash Misidentifies the Problem

05 September 2017

London, September 5th 2017 – Cash Matters, a movement by the International Currency Association, ICA, issued a white paper today that takes a global look at the correlation of cash and crime. The paper, written by Dr. Ursula Dalinghaus, a Postdoctoral Scholar at the Institute for Money, Technology & Financial Inclusion (IMTFI) at the University of California, Irvine, is an in-depth evaluation of a wide range of studies and data, enabling the most comprehensive approach to the issue of cash and criminal or terrorist activities to date.

Key findings of the paper are:

  • There is little to no evidence that limiting cash will effectively target the financing of crime and terrorism;
  • Targeting cash misidentifies the problem – curtailing cash will do little when criminals already make use of a diverse portfolio of payment technologies and methods. Increasingly, electronic forms of transmitting and converting value are just as essential, if not more so, in supporting criminal as well as terrorist activities;
  • In our current monetary system, legal tender – in the form of cash – is a public good that guarantees ease of use, accessibility, a certain level of privacy, and many other unique qualities;
  • Physical cash denominations concretize value and act as a stabilizing agent in the financial system;
  • Restricting cash payments entails the criminalization of legitimate payment activities;
  • Qualitative data on cash payments is scarce; the only existing data points surface through the use of cash.

“While the ICA and, naturally, its Cash Matters movement are clearly supportive of all measures to fight terrorism and crime, we have long been skeptical of the claims that eliminating or restricting cash would contribute to the decline of criminal activities or at least be a substantial obstacle. This paper shows that our skepticism is justified. There is little to no evidence or data that corroborates the efficacy of limiting cash in the fight against crime and terrorism“, said ICA Chairman Barna Barabas.

The paper was commissioned when early this year the EU issued an impact assessment on its initiative to implement a harmonized limit on cash payments across the EU Member States. “We knew we needed substantial, well founded, and scientifically sound arguments in order to convincingly make the case for cash when talking to the EU”, explained Andrea Nitsche and Gerben van Wijk, responsible for Cash Matters. “The IMTFI has an excellent reputation, and we were very pleased when they consented to a scientific evaluation. This paper draws on data and facts well beyond the European scope and collates a wealth of new material and hitherto unknown studies that cast fresh light on the discussion and open up new perspectives. Fighting crime and terrorism requires a concerted societal effort and activities across a wide range of areas. Focusing on cash will not achieve the desired effect.”

Download Cash Matters 'Keeping Cash' White Paper here - A4 (8.26" x 11.69")

 

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