Ban Cash to Reduce Corruption

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- By Asad Dossani, Author, The Lucrative Derivative Report 

Asad Dossani

How can we reduce corruption? This is one of the most important issues we face as a nation. We are all aware of the negative impacts that corruption has on society. So what are we going to do to fix it? Here is one idea: Ban all large cash transactions.

Cash transactions are a fuel for corruption. Since cash transactions cannot be traced, it is very easy for two parties to exchange cash without anyone finding out. It means that a business that earns cash can evade tax. It means that a politician can accept a large bribe. Without cash, accepting a bribe becomes much more difficult.

This would work as follows: All transactions above a certain amount cannot be made in cash. Instead, they must be made using debit cards, credit cards, checks, or bank transfers. This means that any large transaction can be traced. Further, large cash withdrawals or deposits should be disallowed. This means that one cannot draw large amounts of cash to make a dodgy transaction. And further, and if someone accepts a large cash bribe, it can't be deposited in a bank or used anywhere.

While banning large cash transactions would not affect petty corruption, it could have a major impact on high level corruption. Cash will still be useful for making small transactions, and this protects those on lower incomes while fighting corruption at the top level.

A solution such as this one will take time to implement. Right now, we do not have the infrastructure for everyone to make transactions using a card or their bank. It is estimated that around 50% of Indians do not even have bank accounts. However, this is something we can change. As more banks open in rural areas, a greater proportion of the population will have access to banks and financial services over time.

Corruption is a long term problem, and it requires a long term solution. Cash is the biggest tool used for corrupt activities. By taking away large cash transactions, we can make it much tougher for anyone to give or accept a bribe. This is something can definitely work towards over time.