With the spectre of negative interest rates hoving into view, is it time to rethink the value of cash as a medium of exchange?
Failure to do so will lead inevitably to currency hoarding as savers turn their assets into cash to avoid the deflationary effects of a move to negative interest charges.
maverecon blog at the FT, Wiliam Buiter, a former member of the Bank of England's monetary policy committee, looks at the options available to hide-bound central banks, including abolition of currency, taxing currency by physically time-stamping it, or
unbundling it from the unit of account.
He concludes: "Taxing currency may be awkward and intrusive, but abolishing currency is not just easy (just do it) but also has considerable advantages as a blow against criminality and terrorism. Unbundling currency and numéraire is something that can
be done over the weekend. I really don’t understand why central banks are not aggressively pursuing options for removing the zero lower bound. It is that they love the seigniorage so much?"