Tax evasion would become more difficult, bringing more revenue to government. And good luck to drug dealers et al. who used to operate on a cash basis.
So goes the theory of economists such as Harvard's Kenneth Rogoff, reports The New Yorker.
Well, that theory is going to be tested out in India. Its two largest bills will be phased out. They constitute 86% of outstanding cash. The goal of government is to eliminate the underground economy. That will mean doing business will be taxable. And shady deals won't get funded.
At the very least, the bad guys will have to establish legit fronts. That could be a step in the right direction. In the worst case scenario they will have to give up on trying to operate illegally in India.
Time will tell how successful this initiative is in India. Meanwhile, policy makers in the U.S. can argue for the elimination of any bills larger than $10. We simply can't envision Tony Soprano paying off his team with 10-dollar bills.
Meanwhile, a growing number of retailers in Boston won't accept cash. That makes every transaction have an e-trail. Bad guys trying to get rid of cash through shopping and fine dining are out of luck.
The world has changed. Contact Jane Genova for complimentary consultation to get the competitive edge in your marketing communications (email@example.com).