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January 26th, 2016 
Awake Goy 
Zerohedge recently posted an article that Norway’s Biggest bank is demanding that cash be banned. The Telegraph newspaper ran an article in May 2015 by Jim Leaviss (head of retail fixed interest at M&G Investments) that calls for all cash to be made illegal. Similar calls to remove cash from the lives of ordinary citizens seem to be gaining in momentum and veracity.
The reasons provided by such proponents range from cash being an “administrative cost” to bank runs being impossible in the absence of cash. Those outside the banking sector are warning that any move to a cashless society is an early warning sign that bank bail-ins are on the horizon. This position does have some merit, since how could it possibly assist a distressed bank during a bail-in, if most of the depositors have withdrawn their money in the form of currency notes?
The wide range of reasons in this clarion call for a cash-less society implies that perhaps, just perhaps, the real reason is not being openly discussed. Much like the proverbial elephant in the living room, everyone nags about the shortage of space on the couch, but none mention the obvious. Interestingly, the Reserve Bank of Australia alludes to the real reason, when it states the following on its web site:
When Authorised Deposit-taking Institutions purchase banknotes from the Reserve Bank, settlement is in Exchange Settlement funds.
“Bank speak” is always difficult to understand, so here is the translation for the common man. In order for commercial banks to obtain bank notes, they have to pay from an account that is held at the RBA. If a commercial bank wants $1 million of crisp new bank notes, then it needs to have $1 million of “central bank money” in its account at the RBA. The obvious question from the nimble minded is; “so how does a commercial bank obtain central bank money?” Answer – all central bank money is effectively borrowed from the Reserve Bank of Australia.
Here is a quote from the RBA (from the same web page) that sets this out; “All balances held by ADIs under these arrangements are directly sourced through transactions between the ADIs and the Reserve Bank, with the funding rate on these transactions also set at the cash rate target.” In short, if a commercial bank wants central bank money then it has to be borrowed at a cost.
Now we have a reality check. Depositors hold approximately $1.7 trillion of electronic money at commercial banks, with the figure increasing by approximately $80 billion each year. These figures can be verified here. The fly in the ointment is that commercial banks don’t just borrow money from the central bank – they enter into repurchase transactions, where they have to deposit “high quality assets” (e.g. government bonds) with the RBA in order to get such central bank money. With the largest bank in Australia, i.e. the Commonwealth Bank of Australia having only $873 billion of assets on its balance sheet (as per their 2015 annual report), it is highly unlikely that any commercial bank will be able to liquidate sufficient assets in order to buy government bonds (to secure the central bank money they need). The numbers just don’t work.
And there you have it; any major and significant rush for cash will leave the commercial banks scrambling to sell assets so that they can buy financial instruments like government bonds – all in the hope of borrowing central bank money with which to buy the bank notes demanded by the public. The phrase “musical chairs” comes to mind.
Source Article from http://renegadetribune.com/eliminating-cash-real-reason/
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