Originally posted by DeepThought
I don't agree that cash is necessary for hiding transactions.
To be clear, I never suggested otherwise.
If anything there is more scope for fraud with electronic currency.
Well, given that the largest fraud tends to be in the Banks and entirely in electronic form, I think that goes without saying. The 2008 crisis and its aftermath involved large scale fraud of various kinds.
Removing cash will not help prevent illegal transactions, they'll simply find ways of making transactions anonymous such as using an alternative exchange commodity (gold is always acceptable).
Swiss bank accounts were very popular at one time.
A major reason for keeping cash is that it has an anti-inflationary effect.
I assume you mean a reason for a country keeping it around and not on an individual basis. For individuals, having cash can result in losses due to inflation (I have lived through serious inflation) and printing cash can be one way to cause inflation.
Further, a country without physical coinage would be vulnerable to a cyber attack on its electronic exchange systems and rapidly be left on its knees.
That, I do not buy. Cyber attack to the point of destroying banks and electronic payments would bring almost any country to its knees. Very few countries still have enough printed currency available so support all day to day transactions. And many institutions have lost the capabilities to deal with it.
I am always amazed at how Zimbabweans seemed to survive for a long time with a virtually useless currency.