How A World Without Cash is a World Without Banks

Karen Petrou on How A World Without Cash is a World Without Banks

On September 8, we issued a report laying out the risks of coming too close to the zero lower bound (ZLB).  Some said then we were alarmist; now, not so much.  As markets push nominal yields below zero for the reasons we laid out, central bankers are as we forecast flirting with nominal rates below the ZLB.  Our paper also described the flight to physical cash that comes with going below the ZLB.  We missed something, though—at least one central banker, England’s Andrew Haldane, had a solution to the flight to physical cash:  abolishing cash.  Respondents to Mr. Haldane have emphasized the threat to...