Ever heard of demonetization? I just learned about it in the case of India where the government has declared overnight, about 1 1/2 weeks ago, that their currency in 500 and 1,000 rupees (worth around $7.50 and $15) has been rendered worthless and taken out of circulation. These bills account for 86% of the money circulation in India.
You see millions of Indians lining up at banks and ATM machines to exchange the worthless currency for new paper bills of 500 and 2,000 rupees, subject to a daily maximum of 2,000 rupees or something like that. Presumably, this is to tackle black market and tax evasion. Indian economy is mostly based on cash transactions so almost everything has been frozen since because people ran out of smaller denomination bills. Now I wonder why 2,000 rupees bills are introduced, if the intention is to deter tax evasion, it seems it makes it easier to keep cash as cash, unless you fear another demonetization later on. Mind you, the big tax evaders have already stashed their ill-gotten gains in Swiss bank accounts, metals or real estate, so most likely have not been affected by all this. I just wonder whether this whole exercise is worth the pains of the millions of Indians who are suffering now.
Cash-based societies do not necessarily reflect that there is black market or tax evasion, I think.
I learned that in Japan, people still use cash instead of paying by credit or debit cards, which is very surprising to me, considering the Japanese are quite advanced in electronics.
My question is why do Japanese, and I don't know people in other countries, prefer cash transactions? Do they know something we don't know?