The war on cash: From anonymity to algorithmic control

In November 2016, India invalidated 86% of its circulating currency overnight. The policy was justified as a strike against black money, counterfeit notes and illicit finance. What followed was one of the largest real-world monetary experiments of the modern era.

Research summarised by the National Bureau of Economic Research found that demonetisation caused a sharp, short-term contraction in economic activity, with declines in employment and consumption concentrated in cash-dependent sectors. Subsequent disclosures by the Reserve Bank of India showed that more than 99% of the invalidated notes ultimately returned to the banking system.

The episode revealed a structural truth: when cash liquidity is abruptly withdrawn, the first casualties are not criminal networks, but ordinary economic coordination.That experience was not an anomaly. It foreshadowed a broader global transition in which physical cash is gradually displaced by digital payment systems that embed traceability, record-keeping and institutional oversight into everyday exchange.

The shift is often described as technological progress or consumer preference. Yet the more consequential transformation lies beneath the surface. Money itself is being reengineered from a bearer instrument into a governed data object. Since 2020, the pace of this re-engineering has accelerated. Covid did not merely trigger emergency fiscal and monetary responses; it catalysed a wider rethinking of economic infrastructure. Global institutions openly framed the pandemic as a moment to “reset” systems and accelerate digital transformation.

In parallel, central banks intensified work on the future of public money. A 2024 survey by the Bank for International Settlements found that 91% of surveyed central banks are now exploring central bank digital currencies, whether retail, wholesale, or both. None of this demonstrates a covert move toward a single global monetary system. It does, however, reveal a striking convergence in how institutions are redesigning money, often through technical standards and pilot programmes that receive far less public scrutiny than traditional legislation.

In an environment of declining institutional trust, that convergence alone is sufficient to generate suspicion. Neither technological inevitability nor absolutist resistance offers a sufficient framework for governing money at scale. At the transactional level, the case for digitalisation appears compelling. Digital payments reduce handling costs, enable faster settlement and integrate seamlessly with formal financial systems.

In Sweden, one of the most digitised payment environments globally, cash now accounts for roughly 10% of in-store purchases, down from over 40% two decades ago. Yet Sweden’s experience also illustrates the unintended consequences of near-cashlessness. The Swedish central bank reports that payment fraud losses exceeded SEK 1 billion in the first half of 2024 alone, describing fraud as a persistent and growing systemic risk. In response, authorities have begun to reframe cash not as an outdated habit, but as part of national payment resilience, supporting stronger obligations for cash acceptance in essential services. Efficiency did not eliminate risk; it relocated it.

Cash is inefficient, costly to handle and poorly suited to automated systems. But it has one property digital systems do not replicate cleanly. It works without electricity, networks, devices, platforms or real-time permission. It is final at the point of exchange. For that reason, the International Monetary Fund has repeatedly emphasised that cash continues to play a role as a fallback and resilience mechanism when other payment instruments fail.

Cash is not merely a legacy preference. It is an “outside option” that stabilises trust in the broader system. When cash is marginalised, participation becomes conditional. Not through explicit prohibition, but through dependence on infrastructure, identity systems, fraud algorithms and intermediary rules.

In such systems, exclusion is rarely dramatic. It appears as failed transactions, frozen accounts, delayed settlements or unexplained denials. These frictions are not evenly distributed. They concentrate among informal workers, small traders and those operating at the edges of formal finance.

China’s digital yuan demonstrates how this conditionality can scale. Official figures released in late 2025 report 3.48 billion cumulative digital yuan transactions, totalling 16.7 trillion yuan, approximately $2.4 trillion, with more than 230 million personal wallets opened. These figures do not in themselves imply coercion. They demonstrate that state-linked digital payment infrastructure can reach population scale without a formal cash ban, reshaping monetary behaviour through architecture rather than decree. Transaction legibility becomes normalised long before participation becomes mandatory.

Europe’s approach reflects a different political culture but converges on similar design assumptions. The European Central Bank continues technical work on a digital euro while emphasising that any issuance depends on legislative approval. The rationale is explicit: reliance on private payment platforms alone raises concerns about sovereignty, competition and resilience

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Public digital money is framed as a safeguard against private concentration. Yet it also extends the domain in which monetary activity becomes systematically observable. Decentralised cryptocurrencies complicate, rather than resolve, these dynamics. Bitcoin and stablecoins are often presented as alternatives to mediated money, preserving autonomy through decentralisation. Yet data from blockchain analytics firms shows that illicit crypto transaction volumes rose sharply in 2025, reversing earlier declines and strengthening political arguments for intensified regulation and surveillance. Crypto demonstrates that opacity attracts enforcement pressure rather than eliminating it.

The result is not escape from governance, but a reconfiguration of it. The contrast between economies exposes the limits of universal solutions. In Nigeria, Africa’s first retail central bank digital currency launched in 2021 with the aim of improving inclusion and efficiency. Yet by February 2025, reported eNaira circulation stood at approximately N18.31 billion, a small fraction of total currency in circulation. Adoption lagged not because digital money was unavailable, but because trust, infrastructure reliability and cost structures remained uneven. Cash continued to dominate where digital systems failed to replicate its simplicity.

This is where the African context becomes analytically decisive. Across much of the continent, cash underpinshybrid economies characterised by informality, intermittent connectivity and high-frequency low-value transactions. Cash is not a refusal of modernity. It is an adaptive technology. Imported models that assume stable infrastructure and universal digital literacy fracture under these conditions. The question is not whether digital payments should expand, but whether expansion preserves redundancy and choice. South Africa’s approach reflects this tension.

The South African Reserve Bank has argued publicly that while a retail central bank digital currency could support innovation and continued access to central bank money, there is no compelling immediate need for implementation. Any decision, it notes, must be evidence-based and weighed against risks and trade-offs. That restraint matters. It implicitly recognises that digital innovation already exists in the private sector, and that introducing a new public retail instrument must be justified by clear public value rather than trend momentum.

A credible counter-argument must be acknowledged. Cash facilitates tax evasion, corruption and certain criminal activities. Greater traceability strengthens enforcement and fiscal capacity. Digital systems can improve transparency and efficiency. These benefits are real and measurable. The complication is structural.

When enforcement is embedded into the payment rails themselves, the same systems that deter crime can scale bureaucratic error, automated exclusion and overreach. Governance shifts from law and institutions into models, thresholds and technical rules that most citizens cannot see or contest.This tension helps explain the surge in public anxiety since Covid. Rapid, coordinated system redesign, combined with declining trust and increasing platform concentration, creates fertile ground for suspicion. Dismissing these concerns as irrational avoids the harder task of institutional accountability.

The challenge is not to choose between cash and innovation, but to design payment systems that remain resilient, contestable and proportionate under stress.The war on cash is therefore not about nostalgia or resistance to technology. It is about what kind of monetary order is being normalised.

A society can optimise money for efficiency, legibility and control. Or it can treat money as public infrastructure that must still function when systems fail and must preserve a sphere of unconditioned exchange.The trade-off now visible is not between cash and progress. It is between payment modernity and governance maturity. Digital money will expand. The unresolved question is whether institutions can innovate with restraint, preserve redundancy and resist turning technical capability into quiet compulsion. The measure of success will not be how seamless payments appear on a screen, but whether economic participation remains robust, equitable and human when the system is under strain.

Nomvula Zeldah Mabuza is a Risk Governance and Compliance Specialist with extensive experience in strategic risk and industrial operations. She holds a Diploma in Business Management (Accounting) from Brunel University, UK, and is an MBA candidate at Henley Business School, South Africa.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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