First India, Now Australia Should Abolish Big Bank-Notes According To UBS

Tyler Durden's picture

Despite widespread chaos, bank runs,  tumbling currency, and economic uncertainty in India following its surprise announcement last week, UBS analysts think Australia should follow India’s lead and scrap its biggest bank notes, extending the war on cash further across the globe.

The war on cash really began to escalate in February when The European Central Bank said it was considering withdrawing 500-euro notes because of an “increased conviction in world public opinion” such high-value notes are used for criminal purposes.

And as a reminder, here is what happened in India this week after they abolished large denomination banknotes, (via Reuters)...

Anger intensified in India on Saturday as banks struggled to dispense cash following the government's decision to withdraw large denomination notes in an attempt to uncover billions of dollars in undeclared wealth.

 

 

Tempers frayed as hundreds of thousands of people queued for hours outside banks for a third day to swap 500 and 1,000 rupee bank notes after the notes were abolished earlier in the week.

 

The banned bills made up more than 80 percent of the currency in circulation, leaving millions of people without cash and threatening to bring much of the cash-driven economy to a halt.

 

"There's chaos everywhere," said Delhi Chief Minister Arvind Kejriwal, a rival of Prime Minister Narendra Modi, accusing the premier of wreaking havoc on poor and working Indians while the wealthy found ways to skirt the new rules.

 

Customers argued and banged the glass doors at a Standard Chartered branch in southern Delhi after security guards blocked the entrance, saying there were too many people inside already.

And now, as Bloomberg reports, UBS analysts thin Australia should follow the same path towards abolishing banknotes...

“Removing large denomination notes in Australia would be good for the economy and good for the banks,” UBS analysts led by Jonathan Mott said in a note to clients on Monday. Benefits would include reduced crime and welfare fraud, increased tax revenue and a “spike” in bank deposits, he said.

 

In Australia, 92 percent of all currency by value is in A$50 ($38) and A$100 notes, the larger of which is “rarely seen,” according to the UBS report. Removing bigger denominations would boost digital payments in a country where the use of cash payments is continuing to fall, the analysts wrote.

 

Since 2009, ATM transactions in Australia have fallen 3.4 percent a year, while credit-card transactions have increased 7.3 percent a year, UBS said.

 

The program would also be positive for banks. If all the A$100 notes were deposited into accounts at the lenders, household deposits would rise by about 4 percent, the UBS analysts said. That would likely be enough to fill the big banks’ regulatory-mandated net stable funding ratios and reduce reliance on offshore funding, they said.

We have one warning for all those pushing the war on cash - and using the "coorruption" excuse - be careful what you wish for... trust only lasts so long. As Devashang Datta concludes,

Our entire monetary system depends on trust. A banknote is a piece of paper that says the RBI will give the bearer another similar piece of paper, or make an entry in an electronic ledger for that amount. The system works because everybody believes that those pieces of paper will be accepted by everybody else and therefore, money serves as an useful medium of exchange. This move has shaken that trust.

And sure enough gold prices in India have skyrocketed since the currency ban.

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LetThemEatRand's picture

If Trump bans fun tickets (Benjamins) then I'll know he's a fraud.  

Raffie's picture

Be ready to exchange $100 and $50 bills for $20 and lower?

CaptainObvious's picture

I did that the other day when I read about what was going on in India.  When the bank runs start, be the first in line.  Or, better yet, be the guy who did it last week so you don't have to stand in line at all.

Stuck on Zero's picture

At this rate it will take 120 lbs. of bills to rent one 110 lb. hooker for the evening.

Boris Alatovkrap's picture

Wisdom of Central Power: Best way to avoid run on bank is make sure bank is not hold much money.

gdogus erectus's picture

Yes but how many of you guys hit the click bate to see what Hermione looks like now? Talk about hyper inflation.

Pinto Currency's picture

Bank deposits: all risk, no return.

This move will accelerate hyperinflation.

Those who hold large amounts of cash will simply find another substitute.

lakecity55's picture

Trading with reefer works pretty good.

David449420's picture

Ah, what are you talking about? I don't see any links to pictures of that young woman.

lakecity55's picture

Banks are so...yesterday.

Grave's picture

be your own bank - use bitcoin

bitcoin creates decentralized trust,
trust is banks main asset, in fact its the ONLY asset a bank has,
and its based on empty air ....
.... trust enforced by threats of violence and murder on a large scale is NO trust at all

purpose of bitcoin is to escape the system of neo-feudalism-through-usury that exists via fractional reserve debtfiat currencies

bitcoin it backed by 2 million terrahashes of decentralised computing power to the point that that bitcoin become a monetary unit in their own right, independent of any "trusted" third party backer or sovereign currency denomination

Boris Alatovkrap's picture

"110lb (40kg) toothless washup hooker" there, is fix it for you.

Dubaibanker's picture

More than 90% of the Indian population (almost 1.23 billion out of 1.37 billion) are struggling with very low business, very low income, medical problems, stress of lining up in banks all day etc.

 

Major vote bank of the ruling party of India has become very angry.

 

400,000 trucks are estimated to be stranded across India, sowing and harvesting has halted, food wholesalers are stranded, jewellers have been shut after the first day (so 7th day shut today), millions of low wage workers have not been paid PLUS cannot buy food etc.

 

If things do not improve by this weekend, expect more protests and some riots due to disappearing food and rising food prices.

Less than 10% population has internet access while less than 0.05% use Facebook actively.

 

Everyone has simply forgotten about the rural masses, the grim economic situation of the banks, the lack of any job creation in the past few years, the foreigners who are leaving India one by one or any other important thing like farmer suicides or OROP etc.

 

Bankers could also be hit and could be harassed or shut inside their own branches. Many such incidents have occurred but are not being reported anywhere in the media.

 

25 people have died in the first 6 days which could reach over 50 deaths by the end of this week in incidents related to demonetisation so far.


Parliament should get disrupted again and no business may be accomplished in the winter session starting today due to OROP and demonetisation related protests.

 

Let's see what does the President India does today after meeting the majority of opposition.

I hope better sense prevails and demonetisation is rolled back in order to make life back to normal for 99.9% of the citizens of India who have absolutely nothing to do with black money yet are being forced to pay the price due to inability to access the basics of life like school fees, food, medicare, transport, rent, income, groceries etc and has brought the economic activity across India to a grinding halt.

 

India’s demonetization takes its toll on major sectors

 

Dame Ednas Possum's picture

And the elite don't care... until they are forced to by the masses. (I bet one of the main motivations here is to get people using their credit cards more often at extortionate rates of interest).

If there is one country on this planet where people will protest with pitch forks, flaming torches and lynch mobs... it's India.

It will be interesting to see this one unfold as people get hungrier and angrier.

You can guarantee also that the Indians will circumvent the system and revert to barter.

Dubaibanker's picture

Hi Dame,

Unfortunately, 95% of people are illiterate and have been dumbed down so much due to caste system, slavery, abject poverty, malnutrition etc. Law and order has no meaning across India. No one cares for the laws, any laws.

Corruption combined with business-political-police nexus means that almost no one is accountable for crimes done by the elites. Almost no major person has ever gone to jail in the last 2-3 decades for their crimes. They have major charges of rape

3 major actors have been in and out of jail as it was a park. Sanjay Dutt and Salman Khan and Saif ali Khan. They broke terror laws, murdered and killed endangered animals yet the courts treated them with handgloves and for the worst terror attacks of 1993 in Mumbai, Sanjay Dutt's evidence was removed from the police and courts due to political connections.

People are so pathetic that it is not even funny. 

There have been hundreds of incidents every year where people die by streetside often raped and beaten up yet no one assists them because everyone is shit scared of getting entangled in court and police procedures where paying bribes and being harassed is considered normal.

It only makes news in India, if the police does not harass you!

Last year a girl was stabbed to death in her own house's bylane by her ex boyfriend in Delhi and she ran into dozen homes but all shut their doors. She died due to stabbing.

I think there is no man left in India. 

Indians only know one thing, how to cut corners and burn Govt assets.

I expect burning of property and buses and general anarchy but thoughts of revolution will only remain a pipe dream in India. Some major catalyst needs to occur for a revolution.

Poor are simply too scared. Who knows when a revolution will come because the poice acts as a terrorist in India on a daily basis to suppress the populace.

Pinto Currency's picture

The Indian people will revert to gold money to fuel commerce.

lakecity55's picture

They have no ATMs where Hanu, my manservant's home village is.

They just recently got electricity. From a solar set-up.

lakecity55's picture

"So, you see, Mr Modi, we banksters own you just as we own all world leaders."
"I see."
"Hand over your large notes, sir."

effendi's picture

I'm in Australia and the day they do this I'll do my bit to fuck their smooth transition. Heres $10,000 in hundreds and i'd like $10,000 in small change. Banks hate it when noodlers clear them out of 5 and 10 cent coins and it wouldn't take more than a fraction of 1% of people doing the swap to completely drain the country dry of small change.

It would also stuff up plenty of retail outlets as everybody would be offloading their 50s and 100s for even small purchases and would drain their till float.

Theosebes Goodfellow's picture

~"Be ready to exchange $100 and $50 bills for $20 and lower?"~

Be ready to turn twenties into silver ounces, fifties into Mexican dos pesos and hundreds into tenths of gold. (If you haven't already.)

lakecity55's picture

No, you will turn them in for pesos.

Pesos for everyone!

NAU! NAU! NAU!

Dirtnapper's picture

More like exchange for PMs and Cryptos.

 

 

Bunga Bunga's picture

Trump loves gold. He should sbolish these worthless federal reserve paper notes and replace them with gold reserve notes.

random999's picture

Depends on why he bans the Benjamins.

If he replaces the FED and the benjamins with something new, non fractional, then he the hero hitler and jfk never managed to become.

sankol's picture

Cashless society means the very end of our personal freedom. The gates of hell have been opened a crack by Modi, and it is definitely not good inside there.

CaptainObvious's picture

Well, it means the end of personal freedom for purchases made in retail shops and online and bill paying and such.  But it means the beginning of personal freedom for purchases made on the black market with whatever object of currency the market dictates, and personal freedom for bartering. 

These raging assholes do learn from history, but not the way you would hope.  They banned alcohol and caused incalculable bloodshed.  They declared a war on drugs and caused yet more bloodshed.  They declare a war on cash, and the economy goes underground, probably with attendant bloodshed.  This is what they want, I think.  Many more dead, and many more crimes from which the prison industrial complex can profit.

Steaming_Pile's picture

I think you are absolutely right, CaptainObvious.  These are some sick, twisted psychopaths who are wielding enormous power.  Why do humans allow other humans to rule over them?  Social conditioning through public 'schools' certainly seems logical, and combined with the endless propaganda being spewed forth from the media it's no wonder nobody can think logically anymore.  Everyone I know is obsessed with who is president or any number of different distractions, and I can't help but ask them "what does it matter?"  You can be your own president and make your own decisions!  Who are 'they' to decide what's best for you?

Theosebes Goodfellow's picture

~"These are some sick, twisted psychopaths who are wielding enormous power."~

Well, they lost me at "it would be good for the banks...". Anything good for banks is bad for the rest of us.

lakecity55's picture

"I'm from the Bank and I'm here to help you."
Wait...

pjoseph's picture

Fully agree with your premise, but there is a caveat.

There is a parallel black market economy which is likely bigger than the real economy.    Cash is used for ~85% of the transactions.    With uncertainty in the air the economy is grinding to a halt.

(Source:  grew up in India.   Personal updates from folks there)

tl;dr:  India is very different from the US in terms of cash usage.    Modi has noble intentions but corruption in the gov is innate and that is not being addressed.

Idaho potato head's picture

The clash between good and evil has been put into high gear and is accelerating. goodbye slow motion collapse. hello cliff

Cheka_Mate's picture

"I.O.U.s- It's as good as cash!!!"

-Dumb and Dumber 

tarabel's picture

 

 

If I understood the other article on the India situation correctly, they are abolishing the 500 and 1000 notes due to mass counterfeiting by their pissed-off former banknote printers and are replacing them with a new 2000 note-- which has obviously never been used before. I would therefore assume that the 500 and 1000 will do a MacArthur once the dust settles and all the old ones, real and fake, are flushed out of the system.

Unless Australia also told the printers to take a hike while leaving warehouses full of banknote paper in their possession, this is an entirely different matter.

PhilofOz's picture

We don't have banknote paper.... they're all plastic now, and not at all easy to counterfeit.

tarabel's picture

 

 

That's sooooo un-Green of them. Bunch of hypocrites.

PhilofOz's picture

Here's our new plastic $5 note with the (other) hag still on it!! Not sure whether to rate queenie or HRC hag1 or hag2

http://www.news.com.au/finance/our-new-5-note-revealed/news-story/fcaca8...

tarabel's picture

 

 

I liked the little Waltzing Matilda ditty best of all. Or, wait, The Old Shearer is what it was, or something like that.

As for the bills, they certainly look like they were designed by a committee of bureaucrats-- which they no doubt were.

Oh, for the days of Morgan and Saint Gaudens. 

 

Edited to add: Truly Elizabeth II Wrecks (Wregina, actually but you get the point) is the worst sovereign in all of British history. She was crowned Queen of the largest empire in the world and will be lucky to pass on the entirety of the island of Great Britain to the Human Tampon.

They say that a King named John will never be allowed again. The same should apply to her.

As for Hillary... Well, thank God. We may not be worthy of salvation but at least we have been given one last chance. That's all I can say.

Sub MOA's picture

why counterfeit the shit ??? they give them to anyone and everyone ...  those snap card carrying fucks have more plastic than the toy isle at wally world

Mile High Perv's picture

From what I read earlier, the Pakistani's are printing more fake Indian currency than authentic Pak currency

onmail1's picture

<-- This keeps eye on you when u use Visa, Mastercard or Amex

debit & credit cards

This is what means by cashless society

u loose ur financial independence

if USA withdraws support for Visa, Mastercard & Amex from India

as it did to Russia

then right now most Indians will become beggars overnight

they dont have cash now and without these cards

they will have nothing except (gold , silver & diamonds)

All hell will break loose

Intentions of govt. are good but it seems that many forces

want it to fail

MrPalladium's picture

"Intentions of govt. are good"

Sorry but the intentions of government are never good.

onmail1's picture

PM Modi is great

but the implementors are ruining his plans

TeraByte's picture

Hacks, pitchforks and torches are transactions, which deplorables will be able to use.

Bill of Rights's picture

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title

CaptainObvious's picture

Well, you old optimist, you...thinking that they will stop violating our foundational documents just because we notice they're doing it.

rejected's picture

The States aren't doing it.... doesn't mention the central government.

Alananda's picture

Fiat currency -- did I get that right? -- no good. Gold, silver, and barter -- good. Hell, why not go cashless? FRNs worthless, right? Electrons in computers have greater value. Just a little pinprick, folks.

Bill of Rights's picture

But wouldn't that make any dollar denominated debt contract null and void?