Human behavior cannot be controlled by economic equations.

Perhaps having a great deal of knowledge gives you tunnel vision. Economists seem to come out with daft ideas from time to time. One such idea being discussed is to get rid of cash completely. Like all silly ideas it seems extremely logical. Paper currencies cost a lot of money to print and replace. True, but apparently central banks make a profit out of printing cash, called seigniorage revenue, which is then turned over to government treasuries. So, are fellows lying when they complain that it costs $3.5 billion a year because of the preference for cash transactions in India? The cash to GDP ratio is 12% for India compared to 3.93% for Brazil, 5.3% for Mexico and 3.73% for South Africa. The difference seems huge but not when you compare the respective populations of the countries. The population of Brazil is around 203 million, South Africa 54 million while that of Mexico is around 120 million, whereas India's population is a massive 1250 million, 6 times that of Brazil. Long lines at supermarket tills are because of time wasted in counting cash. Surely, it takes more time for a debit card to be swiped and for the customer to key in her pin number? Cash is anonymous so criminals use vast amounts. Electronic transactions are easier to trace so crime would be reduced. If cash is abolished there will be enormous demand for virtual currencies, such as bitcoins, and criminals will probably devise their own currency. It is worth noting that the cash to GDP ratio for Mexico is less than half that of India even though Mexican drug gangs generate over $15 billion annually. Maybe, the real anger of central banks is because they cannot reduce interest rates to below zero, as Switzerland has done. If they have to pay to keep money in banks people will simply withdraw cash and keep it at home. Banks will then have less money to lend for investments. But as usual economists discount human ingenuity. People could buy gold, as they are fond of doing in India, where import of gold rose by 78% to $3.1 billion in April. Or people could buy other commodities sparking a boom in commodity prices and leading to inflation. Low interest rate is of enormous help to the wealthy who can increase their assets, especially properties. Asset prices, such as real estate and stocks, have risen by 19% last year in Britain but inflation rate has gone into negative for the first time since 1960. It maybe good if it is due to falling fuel and food prices but not if it is due to falling consumer demand. Speaking in New York yesterday RBI Governor, Raghuram Rajan was scathing about " competitive monetary easing " and said that growth could come only from increased consumer spending. Consumer can only spend if they have money, which will come through low inflation, low taxes and job security. If the ease of cash is taken away they may stop spending altogether.