Image by: RomoloTavani, ©2017 Getty Images

What would happen if the US government eliminated all large currency? What if your $20, $50, and $100 bills became illegal, and you had to turn them in or lose the money. Can’t happen?

On March 9, 1933, Franklin D. Roosevelt repealed the gold standard and confiscated it, replacing it with gold certificates. In modern times, countries like India and Venezuela recently took bold actions to reduce their cash commerce and replace it with an electronic equivalent and new currency.

On the same day that Donald Trump was elected President in November, India, without warning, scrapped 86% of its currency. The 500-rupee (worth about $7.57) and the 1000-rupee (worth about $14.74) notes became worthless. Citizens were given a few weeks to turn in their money for new bills or that money became useless, being replaced with a new 2000-rupee note.

Unlike the US, India’s economy is largely based on cash. Steve Forbes writes in a recent Forbes article that the motivation for this action was to “fight corruption, crippling criminal enterprises and force-marching India into a digitized credit system (...) Not surprising, the government is downplaying the fact that this move will give India a onetime windfall of billions of dollars" According to Barron's writer Dimitra Defotis, this number rests at $7.3 billion.

To make matters worse, there was no advanced notice or planning. As a result, the new Indian rupee was not available when the old currency became obsolete. People could not get cash, and the economy ground to a halt, since 90% of transactions in India involve cash (fewer than two percent have credit cards). Without cash, businesses could not pay employees or buy farm products, and people had to wait in long lines to turn in their old currency before it became worthless. By one estimate, the annual Indian gross domestic product (GDP) will suffer by two percent because of this action.

In addition, Wall Street Journal reporter Anatoly Kurmanaev writes that Venezuela in November eliminated “the largest circulating bank note" (100 bolivar bills, which is equal to three cents in the US and is half of the cash supply) to combat contraband, replacing it with a new 500 bolivar note. Plagued with a projected inflation rate estimated to reach 1,600% in 2017, it seems like a futile move, and one can expect more drastic action in the future.

What About the US?

Christopher Mims reports that “the US is moving away from cash.” We see this in our own lives. I rarely go to the ATM anymore and only use cash for tipping. Hopefully, President Trump will never take such a drastic action, since the market is already doing it for us. Legitimate businesses would rather not deal in cash. For example, Mr. Mims writes that a coffee shop in Baltimore stopped accepting cash after being robbed five times in three months, as did a large restaurant chain to reduce the chance for robbery.

Technology Is Facilitating the Move

Companies, which we may or may not be familiar with, are all facilitating electronic payments, including Square, Stripe, Klarna, Clover Go, Spark Pay, Forte, iPayX, Venmo, PayPal, Apple Pay, and other similar offerings. In 2015, the global value of credit card transactions exceeded cash for the first time. Last year in the US, approximately 22% of transactions were made in cash, far below many other countries. However, until everyone has a bank account, the personal and economic pain of reducing cash is real.

Globally, the move to a cashless society seems inevitable. Businesses want it; governments want it; and the middle class wants it. Furthermore, the European Central Bank will stop printing the €500 note in 2018. Canada and Singapore have phased out their large denomination bills as well, and the Philippines and Denmark are encouraging a switch to electronic payments through regulatory change.

Will the US government eliminate $100, $50, and $20 bills (which represent 97% of currency in use) in the name of increased tax revenues and lower crime? Only time will tell.

Richard Rosen is the Chief Executive Officer of The RH Rosen Group. The RH Rosen Group works with clients to reduce costs and improve cash flow through paper reduction and process improvements. Contact him at

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