Paper money today is a marginal part of the currency in circulation and represents a direct relationship between the end user and the central bank. Its use is, however, unknown to the central bank; in a certain sense, it can therefore be said that like cryptocurrencies, cash can be used for illicit purposes. Central banks could start the process of digitizing paper money and thus create their own digital currency. Such a solution would have the great advantage of combating the shadow economy and illegal activities, and could be a viable alternative to corporate-backed digital currencies like Libra.
The amount of cash circulating in the world is around 10% of the total money supply [the author derived this calculation using information from individual central banks]. De facto, cash represents a direct and untraceable relationship between the end user and the central bank. In many ways, the cash in circulation is similar to crypto: Central banks and regulatory institutions are not aware of what you do with cash — unless you run into Anti-Money Laundering policies, exactly as it happens when you exit the banking system and move toward the cryptocurrencies markets. With crypto, the transactions are recorded on blockchains, which are encrypted accounting ledgers. However, tracking an operation in crypto assets is like searching for the contents of a safety deposit box without knowing the bank, the address and without having the key.
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