Restrictions On Cash

Cash is the father of all evil. This is the essence of Russia’s Finance Minister Anton Siluanov’s proposal to restrict cash payments by a special law. Banknotes should not be used for large purchases, paying salaries and pensions.

‘In Russia, the total share of cash is 25% of the total money supply,’ says Anton Siluanov, ‘In developing countries this figure is about 15%, while in developed countries it is 7% to 10%. Unaccounted cash leads to an increase in the shadow economy which in Russia amounts to about 30% of GDP.’

Six month earlier, in July 2011, the Sberbank’s president German Gref suggested a total prohibition of cash transactions. The head of the largest bank in Eastern Europe suggested banning cash payments everywhere in Russia. Though few were against some restriction, the idea of total prohibition seemed nearly as grotesque as that proverbial drug dealer with a case full of bucks. German Gref argued that cash is the blood of the underground economy and fighting it would increase Russia’s GDP by as much as 1%.