Digital cash — virtual money held in a government-controlled repository that consumers can spend on real-world goods — tends to be secure and immediate, but Austria is having second thoughts about it.
AFN recently reported that while payments by card and electronic methods have become increasingly common in many European countries, Austria and neighboring Germany remain relatively attached to cash. The government says 47 billion euros ($51 billion) per year are withdrawn from ATMs in Austria, a country of about 9.1 million people.
Rob West of "Faith & Finance," the radio program formerly known as "MoneyWise," says the country, which has populist leanings, is wary of the source that is pushing for a cashless society.
"I think this is a response to the move from Davos and the World Economic Forum," he submits.
The drawback, West explains, is like Communist China's social credit system, the cash would be held in a government bank, for lack of a better term, giving it a lot of leverage.
"The concern about a Central Bank Digital Currency is that everything runs through the central bank, and so every transaction would be under their purview, both in terms of access to the data as well as the ability to impose social controls," West continues.
With that and the benefits to using cash in mind, Austria is considering putting the right to use cash into its constitution.
"We have this psychological connection when we use cash," West relays. "The data says we'll spend on average about 30% more, or up to that, when we're not parting with physical cash."
Meanwhile, he advises Americans to pay attention to what is happening in Austria, as there is a push on this side of the pond for a digital dollar.
"The place to deal with all of this — whether we have a Central Bank Digital Currency, or whether we permanently shore up the ability to use cash as legal tender — that all needs to happen in the Constitution," says West.
Protecting cash against threats such as a digital currency has been a demand of Austria's Freedom Party, which has led polls in recent months. The country's next election is due in 2024.
