USD 207 million in cash,
two tons of paper,
that’s how they look like.
This amount of cash was confiscated in a police anti-drug operation
in Mexico City
and it’s one of the most lethal weapons they found there.
Normally, we associate fire guns with drug trafficking.
However, cash is one of the key weapons
for these criminals to be able to operate.
It allows them to make transactions outside the financial system
and, therefore, be much less detectable by the authorities.
Cash is an accomplice of drug trafficking.
90 percent of the dollar bills in circulation in the United States
have detectable traces of cocaine.
If you ever used dollars for some transaction,
it’s likely that they have been in contact with this drug.
Think about that.
And it’s not just for drug trafficking that cash is convenient.
It makes several different crimes a lot easier.
For example, corruption.
We all want to end corruption.
However, imagine a car driver
that goes over the speed limit.
A policeman stops him and says:
Excuse me, sir, but I will have to make you a ticket.
The driver looks to one side, to the other
and rehearses a version of this known question,
which, of course, you never made:
How can we fix this?
The policeman looks at him, smiles kindly and says:
No problem!
Make me an instant bank transfer.
Here I give you my full name, ID number,
this is my account, while I make you a receipt
for “quick cancellation of fine services.”
(Laughter)
It’s not like that, right?
Obviously not!
Without cash this cannot happen.
Cash is so important for this that it has become —
Think about the bags full of money,
they are a symbol of corruption.
However, this goes much further.
In addition to making crime possible, I want to convince you
that money is something primitive, old, old-fashioned, a relic.
Do you know how old paper money is?
Cash?
It was the year 1260 and Kublai Kan, ascended to the throne of China.
He was the grandson of the great Mongolian conqueror Genghis Khan.
One of the most important economic decisions
that his government took was to unify all coins minted
by the different provinces in China and to make one single national currency.
A couple of years later,
Kublai banned commercial transactions done with gold and silver.
In this way, for the first time in the history of the world,
a monetary system was created based exclusively on paper money.
But how did Kublai Kan manage to convince his people to use paper money?
Think of the money in your pockets.
Painted paper.
If you were not used to use it,
would you prefer these pieces of paper instead of gold and silver?
It turns out that in times of Kublai Khan,
things were a little different and he had at his disposal
some political tools
that today we wouldn’t consider completely appropriate.
(Laughter)
Of course, he who was found
making transactions in gold and silver,
was executed.
It seems that, in that way, paper money
was quickly picked up throughout China.
(Laughter)
Moreover, Marco Polo, the great legendary Venetian adventurer,
wrote a few years later, when he came Kublai Khan’s court,
that few things had amazed him so much
from the Far East as this paper money
spread throughout the country.
They say that the good is short-lived.
And with this possibility to print money on paper,
came up the temptation to print more and more to finance the government.
This brought episodes of high inflation during the 1300s and 1400s.
It turned into such a mess that by the year 1500, the Chinese said:
Let’s stop this paper money thing because we cannot stand it anymore.
So, it took them until the 19th century to reintroduce banknotes.
We know this for centuries.
To print more to finance the government brings high inflation.
And this is not a tall story.
(Applause)
But isn’t it strange that after 700 years we still use the same technology?
In the year 1300 we were riding carts.
Today, we travel by plane and we keep paper money.
(Laughter)
Do you use a Walkman?
How many of you have seen a Walkman in your life?
(Laughter)
No, having seen the movie
“The Guardians of the Galaxy” doesn’t count.
(Laughter)
This technology, in 30 years, rendered obsolete.
And we are still like Kublai Kan, with pieces of paper.
To put this relic in perspective,
think about this: let’s send some emails, a few emails,
to different people, in different parts of the country.
You normally press “send”, in a few seconds
the emails are in the mailboxes and that’s about it.
Everyone can read them.
Today we will do something different.
Today you will print those emails.
A pile of e-mails like this and you will dispatch them.
How will you deliver them?
By truck.
How silly! Isn’t it?
How would you do that to deliver emails?
However, that’s exactly how money travels today.
You’ve seen it: armored trucks, huge security measures, police.
What for? To transport paper.
(Laughter)
On top of it, money loves to travel.
Did you know this?
Money loves to go from one end to another end of the country.
And let’s do it by truck, use gas and pollute everything.
Why? The amount of bills needed
in different parts of the country varies a lot with the seasons.
In Mar del Plata, for example, during the summer months,
there are many, many more people than during the rest of the year.
These people will eat, go to the movies, do some shopping.
And for all that, if you use cash, you need a lot of bills.
ATMs overflowing with money.
Think of it: the summer ends, people leave,
probably with a tan, without a penny, but happy because they spent
all that money and they left it in Mar del Plata.
Summer ends and all those banknotes are left over,
piles of cash in Mar del Plata.
A few months later, it’s July and Bariloche is full of snow.
With snow comes the mass of tourists ready to ski,
to eat chocolate, to break a limb in the mountains,
And they also need all those bills.
Those that were left in Mar del Plata.
How do those bills travel from the ATMs
in Mar del Plata to ATMs in Bariloche?
You know, by truck.
From one point to another.
And not only those big cities, but also small towns.
All trucks. Think: trucks from one place to another.
And this is the easiest thing.
How does it work for the most remote places of the country?
How do they make it in some town difficult to access
in the North of Jujuy or the South of Tierra del Fuego?
How does it work? Worse, of course!
And this affects the poor, more than anyone else,
those who don’t have access to the financial infrastructure.
The fewer bank accounts you have,
the more you need to use cash in your daily life.
And what about personal safety?
The more cash you have to carry every day, the more dangerous it becomes.
I work at the Central Bank of Argentina
and we will end with the use of cash in our country.
(Applause)
Well, of course, it’s easier said than done, like everything.
However, we’ve done many things to move towards this goal,
little by little.
We have made a great simplification
so that opening a bank account is easier.
And also, we demand from banks that they provide a basic set
of financial services completely for free.
In this way, the more you increase financial inclusion,
the less essential it will be to carry cash with you.
But this is not enough.
That’s why we created a platform for mobile payments.
This platform allows you, only with a cell phone,
to send money for free immediately, to friends, acquaintances,
and also to shops.
And it allows the shops to receive those payments
also free and immediately.
They even buy a lil gadget, to plug to the cell phone
and they can swipe a card.
With two cell phones, no more, you can today,
make a commercial transaction.
It’s easier than sending a WhatsApp.
This creates very serious problems for many people in the economy.
Imagine going out for dinner with your friends and someone,
always the same guy, goes:
– Hey, you know that… sorry, I forgot my wallet, can’t believe it!
– No problem, you know what?
You probably didn’t forget your phone.
Make me a transfer and in a minute, I have the money.
So let’s order for the second ham and red pepper pizza,
it’s all good, there is money.
And to the one who always do that, you run out of excuses.
So pay!
(Applause)
However, we have a problem to continue with this plan
to eliminate cash:
Almost a third of Argentina’s economy today is informal.
If we made cash disappear all of a sudden,
this part of the economy I would blow up in the air.
And it’s something we clearly don’t want.
What else have we done to go along these lines?
Perhaps, one of the most important things
is that we don’t receive cash from banks anymore.
Of course, when banks need money, they come to the Central Bank
and we give them all bills they need.
However, when these bills are left over, like in Mar del Plata,
it’s for them to fix it.
The tourist agency needed to make money travel over the country,
which is expensive, now they banks pay for it.
Therefore, since it’s expensive, everyone is aligned today
to push this agenda of eliminating cash.
A very big transformation is coming, a transformation for good.
Many industries will have to reconvert.
For those who are paying attention,
there are going to be spectacular opportunities
to take advantage of this new, more efficient world.
Let’s leave cash to Kublai Kan
and move on to the future.
Thank you.
(Applause)
”
Be First to Comment