People forget the only thing that is important is the exchange not the material used to do so. It’s all promises at the end of the day.
In a purely cashless society, the central bank could force a -10 per cent interest on all savings, thus forcing people to spend even if they don't want to.
(This was, for example, discussed on the IMF blog pages: https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-nega...)
This is harder to do in economies where people can take their money out of the bank as cash. There, the lower limit for interest seems to be around -1 per cent.
Cash is a facilitating fluid which should be channeled into diverse investments which are not based on monetary value such as property and resources, not stashed in large piles. Holding any cash in any quantity is a risk. Doesn’t matter if it’s magic numbers in a computer or bits of paper in a mattress.
As for cash only society, sorry but fuck that.
As usual, some people want to undergo this risk in order to balance out other risks. For example, your bank account can be frozen under a variety of scenarios, even unjustly so. In such situation, it is better to have emergency cash at hand.
Diverse investments are good, but some liquidity is good as well. If you e.g. need to escape a starting civil war, things that can be carried on a person and have near universal acceptance are more valuable than a roll of blue chip stocks or a nice house that you cannot take with you. I have met people who escaped the siege of Sarajevo; cash and gold went a long way helping them out.
"As for cash only society, sorry but fuck that. "
That isn't something I proposed.
It's called inflation and it doesn't care if your money was securely left in your mattress
Countries like Italy cannot inflate their way out of debt anymore. ECB, at least officially, is trying to keep inflation low. But negative interest rates would help the heavily indebted countries to ease their debt service burden.
(If such constellation of parameters is sustainable, IDK, but that debt isn't going anywhere.)
By penalizing their creditors, sure. That should teach them (and anyone else paying attention) not to lend to such countries in the future.
It reminds me of Baron Munchhausen pulling himself out of the swamp by his own hair.
Promises that the money will be worth it the next day, sure. But at least I have my cash in my hand (and some stored where I live), so access to it can't just be denied.
Whoever thinks getting paid in cash is "free" is going to be outcompeted really quickly.
But even (some) old people seem to prefer paying with card today, so change is slow.
Cash is only worth what someone else agrees it is worth.