In July 2019, the Australian Government announced a Bill called the "Currency (Restrictions on the Use of Cash) Bill" which if passed, would make it a crime to conduct almost all cash transactions above $10,000 AUD. There are also provisions in the bill which would allow the Government to expand what counts as "cash" at any time in future. This means that Cryptocurrencies such as Bitcoin could face the $10,000 AUD limit instantly, with no further debate in Parliament.
This Cash Ban Bill was supposed to come into effect in Jan 2020. Anyone that breaks this law would face a 2-year prison sentence and fines of up to $25,200. The mainstream media, including major financial news publications, wrote almost nothing about this Bill whatsoever at the time it was announced in July 2019.
There was a period of 2 weeks after the announcement of the Bill where individuals and businesses could take part in a Consultation with the Australian Treasury. The whole point of this exercise was for all concerned parties to be able ask questions, address concerns and request further clarification. Normally these kinds of Consultations run for about 4 weeks, not 2. Again, there was no mention of this Consultation from the financial press or mainstream media.
Since the Treasury Consultation period ended, more and more people have found out about this proposed Bill and have spoken out against it after understanding the implications. The pressure from concerned individuals and businesses has led to a Senate Inquiry to take place.
Australians now have the opportunity to upload or email a submission to the Senate Inquiry. Thankfully there have also been some major articles in the mainstream media from Aug 2019 onward but these articles have not been widely circulated. I have listed some important resources and videos at the bottom of this article.
What's the Real Agenda?
The public have been told that the Cash Ban Limit is to reduce the Black Economy, Tax Evasion, Money Laundering and other Illegal activities. This all sounds good on the face of it.
However, the real reasons behind the introduction of this legislation are not what the Politicians want everyone to hear. This Cash Ban Bill is being introduced so that the Government can be in a position to implement Negative Interest Rates and Bank Bail-Ins during a future recession.
The instruction manuals for how and why Governments should do this are publicly available from the International Monetary Fund (IMF):
1. IMF Paper – "Enabling Deep Negative Rates to Fight Recessions: A Guide"
2. IMF Paper – "From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions"
The UK, US, New Zealand and Australia have already passed Bail-In Laws and more countries are trying to do the same. So, the next logical step is to implement Laws to allow for Negative Interest Rates to be introduced.
Below I have discussed some of the many important reasons to oppose this Bill and why I think it is very important for you and your friends, family and colleagues in Australia to create a submission to oppose it in the Senate Inquiry here. Feel free to add comments and ideas below if you think there are other important points that have been missed. Sharing information and ideas will help people who want to create a Submission to the Senate Inquiry, to understand more of the implications of this proposed Bill. My personal submission to the inquiry covers all of the points in this article.
The key thing is to take action and email or upload your submission before the 15 Nov 2019 deadline. The report is due on 07 Feb 2020. Contact your Federal and Local MPs & Senators. Ask them to oppose this legislation. You can find your Representatives here. Ask them to push for Public Hearings like those in the Banking Royal Commission so that this legislation can be properly debated by everyone in Australia.
Negative Interest Rates and Bank Bail-In – Trapping People in Banks
Negative Interest Rates
Many countries around the world now have interest rates that are 0% or negative in order to stimulate economic growth. Yes that's right, in addition to charging fees, banks in certain countries now charge you every month to hold your savings. This is theft, plain and simple. This table shows you the latest interest rates all over the world, sorted from highest to lowest. The latest data shows that 4 countries have negative interest rates: Japan (-0.1%), Sweden (-0.25%), Denmark (-0.75%) and Switzerland (-0.75%). There are an additional 21 countries that have 0% interest rates including Germany, Spain, Portugal and the Netherlands to name a few.
Lessons from Japan
When Japan introduced 0% interest rates in 1999 it didn't really have much of an effect of stimulating the economy. After more than a decade of no growth, Japan introduced negative interest rates of -0.1% in Jan 2016. This led to people withdrawing cash to store at home. After all, if your cash is earning nothing at home, it is still earning 0.1% more than holding it in the bank where a small amount of your Yen would die every day.
Disappearing ATM machines and Bank branches
Many countries around the world do not want people to be able to withdraw cash like the Japanese did when interest rates go negative. This is why you see ATM machines and bank branches disappearing all over Australia and most of the Western world. It is the reason why things like PayPass, Apple Pay, Google Pay and Samsung Pay are all being pushed so heavily. It is all to get people used to not using cash because habits are very hard to break. All of these moves in unison are in preparation to introduce negative interest rates and trap your savings in the event of a future bank bail-in.
During the 2008/2009 Global Financial Crisis major banks in the US and the UK were only hours away from collapsing. Wall Street received a bail-out of over $700 Billion USD and of course it was left to taxpayers to foot the bill.
During the next global recession, most Governments simply won't be able to bail out banks because the Global debt situation is even worse. So, what is the alternative to screwing the taxpayer? Stealing money from hardworking and productive savers of course!
On 14 Feb 2018, the Australian Government passed a bill into law which meant that Savings Deposits would not be protected in the event of a bank bail-in. If you've never heard of a bail-in before, one has already been used on savers in Cyprus. More information is here from Investopedia.
The detailed timeline of events in Cyprus is outlined in here. But in summary: over a period of 8 days in March 2013, savers in Cyprus witnessed the Government extend a bank holiday (twice), introduce cash withdrawal limits of €100, to then finally taking (i.e stealing) 40% - 60% of savers' deposits if they held more than €100,000 in savings.
Just like that, hard working Cypriots had their savings stolen over the course of 8 days. This is what the Australian Government can potentially do in a future recession thanks to the Bail-In law that was passed in Feb 2018.
No Escape with Bitcoin or Cryptocurrency
The proposed Cash Ban Bill has provisions in there which allows the Australian Government to classify other asset types as cash whenever they want to. It won't come as any surprise that they have done this deliberately to include Cryptocurrencies like Bitcoin at any time in the future.
One of the benefits of Cryptocurrency is that it is outside the banking system. Just because you want to hold your wealth in a form that doesn't die every day with negative rates that does not make you a criminal. But of course, that doesn't matter.
If all the Government wanted to do was simply to ban Cash, Cryptocurrency achieves that without needing to involve the banks. This alone is proof that the real agenda is Negative Interest Rates and Bail-in.
Moving Goal Posts – $10,000 AUD to $2,000 AUD
In Italy the cash transaction limit is €2,999.99 EUR and in Spain it is €2,500 for residents. There are fines for breaching these limits. KPMG, who originally suggested the Cash Ban, are apparently already lobbying for the $10,000 AUD limit to be reduced to $2,000. I will explain KPMG's role in more detail below. There is nothing stopping the Cash transaction limit being reduced to $0.
Banning Cash Transactions is a Threat to Freedom and Liberty
People should not be forced to use banks if they do not want to. Citizens have a legal right not to use them. Cash is legal tender in Australia and is a convenient method of exchange between Individuals, Businesses and the Government. This is especially important in rural and outer city areas with poor or minimal telecommunications infrastructure.
If cash transaction limits are put in place, that means that authoritarian levels of monitoring will need to be implemented in order to track every transaction that occurs in the economy. This is would be a gross violation of peoples' privacy in a free and democratic society. The Australian Government does not have the right to force everyone to live in a surveillance state. The Chinese Social Credit System that has been in place for several years now is an example of where this kind of financial surveillance leads.
Higher Fees and Charges by Banks
By forcing everyone to use the banks for all financial transactions, this will lead to more price gouging in terms of higher bank fees charged to businesses and individuals. Banks will increase charges and fees when there is no alternative to using them. Imagine facing a scenario where your savings are hit by negative interest rates and high fees. When you have nowhere left to go, you will only be able to sit back and watch your savings burn in front of you.
Competitive alternatives such as Bitcoin or other Cryptocurrencies won't necessarily help because the provisions in the Cash Ban Bill allow the ban to be extended to cryptocurrencies with no discussion in Parliament or with the Public.
The Cash Ban Bill will reduce competition and increase the fraud and corruption that was demonstrated to have taken in the Australian Banks by the Banking Royal Commission.
The Poorest in Society will Suffer More
There are many people in society that do not have bank accounts, credit or debit cards. It's easy to forget this when you work in an air-conditioned office watching cat videos on your $1,500 iPhone.
As the economy weakens, income inequality will get worse. The number of people who are on low incomes, who lose their jobs, or who declare bankruptcy will increase. These people currently either work for cash in hand or may find it difficult to get bank accounts and credit cards. Cash is a perfect medium of exchange for that person to get paid and buy everyday necessities without having to rely on a bank or payment cards.
Cash is High Speed, Instant Settlement – Mitigates Bank IT Outages
Cash transactions are settled instantly. There is no need for either party to wait for funds to clear.
This is extremely important when there are more and more cases of banks' IT systems failing more frequently in Australia, the UK and the rest of the world.
In Jun 2019, the RBA reported that the number of crippling outages in retail payment systems due to Bank outage time in Australia increased by 40% as you can see in this article from IT News
In the UK we have seen TSB Bank suffer so many outages that these incidents have led to potential data breaches. Halifax and Lloyds Bank have suffered multiple outages over a period of many months with, ironically, their Fast Payments Systems!
Traditional Bank IT systems are archaic. They keep failing because they cannot keep up with the increasing requirements for real-time settlement for large, small and micro transactions. Cash is an instantaneous form of payment which does not require the use of legacy IT that was designed for a different era. Cryptocurrencies are real-time systems where transactions can be settled in minutes and are more resilient because they are decentralised.
Practical Benefits of Cash – Disasters and Power Cuts
Cash is absolutely critical when power is cut and large suburbs or even entire cities are left without electricity.
We are seeing this right now in 2019 with PG&E in California cutting power to millions of residents for days. Many people can't forget the Power Outage in New York in 2003 where power was cut for 30 hours. New York was hit again in July 2019.
Cash is a great method of payment when things go wrong. Making everything digital is awesome, until the power goes out.
Increased Impact of Hacking and Data Breaches
The Australian Government will need to be able to track every transaction in the economy in order to ensure that Cash Ban limits are not exceeded. These transactions will be stored in multiple large databases managed by banks and other financial institutions. Massive centralised databases at this scale would be a huge target for hackers and criminal gangs to sell and monetise this data through fraud.
We saw after the massive data breaches that occurred at Experian in Oct 2015, and with Equifax in Sep 2017, that tens or hundreds of millions of dollars' worth of fraud and identity theft subsequently took place. Many people will be affected by this for the rest of their lives. Here is an infographic of the massive scale of these breaches that have occurred every single year with billions of usernames, passwords and identities affected.
Threat to Free Speech and Independent Journalism
In the past few years, many Independent Journalists, certain Retailers and people with Conservative political views in the US have had their bank accounts shut down. Cash and cryptocurrencies have been the only alternatives they can use in this situation.
Activists have repeatedly called for restrictions on free speech and debate. This is a very dangerous trend and could be accelerated with the Cash Ban legislation.
Cash currently enables anyone affected in such a scenario to carry on with life, albeit with severe restrictions from many online services. However, it would render someone unable to pay rent or buy food if cash was completely banned in the long term due to someone's beliefs or ideology.
The Excuses for the Cash Ban Bill are False or Misleading
The Black Economy
One of the biggest justifications for the Cash Ban Bill is to reduce the size of the Black Economy which the Australian Government asked the Black Economy Taskforce to investigate in 2016.
A 2018 report from the IMF called "Shadow Economies Around the World: What Did We Learn Over the Last 20 years?" by Medina & Schneider, showed that Australia had the 10th smallest black economy in the world, out of their tracked index of 158 countries. More information discussing the flaws in the Taskforce's report can be found here: www.exposingtheblackeconomyreport.com
The truth is that the black economy has been shrinking and Australia has less of a problem in this area each year, even without cash restrictions.
Restricting Cash won't stop Tax Evasion or Money Laundering
The Cash Ban was recommended to the Morrison Government by Michael Andrew, the Australian ex-head of KPMG. Ironically, it is the big 4 accounting and audit firms, including KPMG, that help large multinational corporations to minimise tax payments.
When it comes to money laundering, there are many examples where Cash Bans for the average citizen would not have made any difference. An example of this is when HSBC and Standard Bank were found by US authorities in 2012 to be engaged in massive money laundering operations.
HSBC was found to be laundering money for Mexican drug cartels. KYC and AML laws & regulations didn't prevent money laundering from taking place because the bank actively circumvented these rules in their systems. It's all very well having the US authorities finding out after the fact, but laws made no difference before these violations occurred.
More Red Tape for everyday Working Australians
As you can see in this article the IRS in America has basically admitted that they audit poorer people more than rich people because it "doesn’t have enough money and people to audit the wealthy properly". More specifically:
(1) The IRS has audit targets to meet
(2) It is easier to automate tax audits for regular people with AI and other computerised systems
(3) It costs too much and is too time consuming to audit large multinational companies
Multinationals minimising tax payments on a global level is what really affects national budgets. They are assisted by the Big 4 Accounting firms on how to significantly reduce taxes. Yet KPMG, one of the big 4, is the company that convinced the Australian Government to implement a Cash Ban. KPMG are already lobbying to reduce the $10,000 AUD cash transaction limit to lower amounts such as $2,000 or less.
The Government already has the laws and regulations in place to chase tax evaders, but they choose not to use those laws to go after executives who deliberately avoid paying taxes. The Cash Ban Bill will simply make it unnecessarily more complex and expensive to run a small to medium business through increased rules and regulations.
"Structuring" - More Innocent People may get In Trouble with the ATO and Authorities
The war on cash has caused many problems for businesses in the US who are dealing with cash in a perfectly legal way. One example is what happened to Business Owner Lyndon McClellan in North Carolina, USA.
In the US, cash deposits over $10,000 must be reported to the US Treasury. Lyndon deposited multiple cash sums under $10,000 into his bank over several days. This came up as suspicious and Federal Agents turned up at his business because he was suspected of "Structuring". Structuring is where someone is suspected of deliberately trying to circumvent the $10,000 reporting requirements.
By innocently falling foul of these "Structuring" regulations, Lyndon had $107,702 in his bank account seized thanks to "Civil Asset Forfeiture" laws. To make matters worse, after he tried to fix the situation, the Federal Government offered Mr. McClellan 50% of his money back if he agreed to a settlement. The full story is here and another similar story involving Structuring and the IRS is here. These are both prime examples of why the Cash Ban Bill should not be implemented. There are much easier ways to figure out if someone is laundering money or engaging in criminal activity.
It won't come as a surprise to you that I personally think this Cash Ban Bill is not in the best interests of the Australian people and strongly oppose it. It may be even more surprising because I run a business to advise companies on how to accept payments faster using the latest Payment Processing Systems, Cryptocurrencies, eInvoicing and Digital Wallets.
The problem with the Cash Ban Bill is that it will reduce the freedoms we enjoy, it is an attack on liberty, and individual privacy will be destroyed by implementing such draconian and authoritarian financial monitoring upon Australians. The Bill will cause a lot of unintended financial consequences from implementing negative interest rates, and, bank bail-in laws will erode trust in banks, institutions and the establishment even further.
Take Action: Next Steps
Time is of the essence so there are a number of action steps you can take before the Senate Inquiry submissions deadline of 15 Nov 2019.
[Submission Deadline: 15 Nov 2019]
Parliament of Australia - Submit or Email your opposition to the Cash Ban Bill here: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/CurrencyCashBill2019
How to Create an Effective Submission to the Senate Inquiry
- Guidance from the Australian Parliament Website - link
- Guidance from the CEC – link (video)
- Email or Upload your Submission here: link
Contact your Federal and Local Members
- Find your Senators and Members here: link
- Phone and email them to ask them to oppose this Bill
- Request Public Hearings like the Banking Royal Commission
Get more information and background to the issues
- Watch these discussions from Martin North (Digital Finance Analytics), John Adams (Adams Economics) and Robbie Barwick (Citizens Electoral Council):
- [16 Mar 2019] - A War On Cash Is A War On The People - click here
- [30 Jul 2019] - ScoMo Declares War On The Australian People - click here
- [21 Aug 2019] - The Anti-Cash Ban Wave Rises - click here
- [24 Oct 2019] - The Cash Ban Passes the House - click here
- [24 Oct 2019] - The Cash Ban Skulduggery - click here
Here are some thought-provoking documentaries that might spur you into action:
1. 97% Owned - How is Money Created – YouTube
2. Hidden Secrets of Money Episode 9 – YouTube
3. Hidden Secrets of Money Episode 10 – YouTube
Share this information
- Share this information with friends, family, colleagues
What are the action steps you can take?
Time is of the essence so there are a number of action steps you can take before the Senate Inquiry submissions
ABC (20 Aug 2019) - Paying more than $10,000 in cash could make you a criminal under proposed law - https://www.abc.net.au/news/2019-08-20/transacting-$10,000-or-more-in-cash-could-make-you-a-criminal/11429230
ABC (26 Aug 2019) - Banning cash so you pay the bank to hold your money is what the IMF wants - https://www.abc.net.au/news/2019-08-26/cash-ban-so-you-pay-the-bank-to-hold-your-money-what-imf-wants/11443646
ABC (25 Oct 2019) - Cash-ban law under review as MPs argue it would push people into 'clutches of the banks', restrict freedom - https://www.abc.net.au/news/2019-10-25/cash-ban-law-under-inqury-post-mp-concerns-on-freedom-breach/11640124
TechNode (1 Jun 2018) Former LeEco CEO Jia Yueting banned from train and air travel - https://technode.com/2018/06/01/jia-yueting-travel-ban/
Trading Economics – Global Interest Rates - https://tradingeconomics.com/country-list/interest-rate
IMF Paper – "Enabling Deep Negative Rates to Fight Recessions: A Guide" - https://www.imf.org/en/Publications/WP/Issues/2019/04/29/Enabling-Deep-Negative-Rates-A-Guide-46598
IMF Paper – "From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions" - https://www.imf.org/external/pubs/ft/sdn/2012/sdn1203.pdf