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Response to suggestion that EU-wide cash payment limits would assist in the control of terrorism finance and money laundering.

Desk review and interviews

The inception impact assessment (IIA) is ill-conceived, not grounded on firm empirical evidence and harmful to both crime control and the legitimate interests and rights of the EU citizens. The action under discussion is presented as a measure against terrorism finance, serious crime and tax evasion. The problem is that these criminal acts correspond to very different methods, volumes, perpetrators, causes and control challenges. Cash payment limitations (CPLs) are nowhere near a panacea that can address all of them and cannot make any of them go away magically. Even when each of these crime challenges are considered on their own, the empirical linkage of CPLs to effective controls is not there. The evidence from EU countries with CPLs in place shows higher levels of informal economy, corruption, tax evasion and terrorism risks than those without. There is substantial evidence of non-cash, very serious and organized crime, while the amounts needed and used by terrorists in Europe are usually very small in cash transactions, way below the thresholds under consideration. In fact, determined offenders will shift to other methods and become more sophisticated, posing new problems to controllers. Displacement and incentives for better-organized crime may well be the main products of such measures.

It counters the argument that the cash payment limits can help reduce serious crime, while pointing to several adverse consequences on legitimate interests and human rights.

This paper aims to examine the contribution of Ethiopia’s cash economy to financial crimes. It also investigates the regulation of cash in the context of controlling crime stemming from the cash economy.

This study relies on primary data generated from 20 interviewees drawn from the National Bank of Ethiopia, Ethiopian Financial Intelligence Center, selected commercial banks and law enforcement agencies and document review from government reports, media press and statutes, as well as secondary data from online and offline sources.

The cash-intensive nature of Ethiopia’s economy has enabled a significant amount of cash to circulate outside of the formal financial system. This money is partly to blame for the prevalence of criminal activities such as cash hoarding, corruption and illicit financial flows. To address the threat of crime posed by the cash economy, the Ethiopian Government has taken measures such as restricting cash withdrawals from financial institutions, limiting the amount of cash individuals can hold and demonetizing the banknotes. The measures enable the banks to collect the cash circulating outside of the formal financial sector. However, the effect of these measures on reducing future criminality remains uncertain. Improving the financial inclusivity of the country, specifically expanding basic financial products to the rural areas, digitalizing the country’s payment system, raising general financial awareness and establishing a strong financial consumer protection framework would play a critical role in reducing future criminality and transforming the cash-intensive into a cashless economy.

This paper provides a first-of-its-kind analytical perspective on the contribution of Ethiopia’s cash economy to criminal activity and the adequacy of countermeasures so far taken.

During 2003, compensation practices for the retail sale of mutual funds came under fire. Recent revelations about failures in the processing of mutual fund breakpoints had triggered a more in‐depth investigation into mutual fund marketing and compensation practice by securities regulators, Congress, and the states. This article focuses on the regulation of sales compensation practices primarily as it affects a broker‐dealer selling mutual funds in the retail market. It addresses the regulatory framework for three key compensation practices: (1) the use of non‐cash compensation in connection with mutual fund sales; (2) marketing and compensation arrangements providing enhanced compensation to a selling firm as well as to its sales representatives for the promotion of certain fund securities over others, such as proprietary funds over non‐proprietary funds, preferred funds over non‐preferred funds, and Class B shares over Class A shares; and (3) the use of commissions for mutual fund portfolio trades as an additional source of selling compensation for selling firms, a practice sometimes referred to as ”directed brokerage.“

The paper explores the precarious balance between modernizing monetary systems by means of digital currencies (either issued by the central bank itself or independently) and safeguarding financial stability as also ensured by tangible payment (and saving) instruments like paper money.

Which aspects of modern payment systems could contribute to improve the way of functioning of today's globalized economy? And, which might even threaten the above-mentioned instable equilibrium? This survey paper aims, precisely, at giving some preliminary answers to a complex – therefore, ongoing – debate at scientific as well as banking and political levels.

The coexistence of State's money (i.e. “legal tender”) and cryptocurrencies can have a disciplining effect on central banks. Nevertheless, there are still high risks connected to the introduction of central bank digital currency, which should be by far not considered to be a perfect substitute of current cash. At the same time, cryptocurrencies issued by central banks might be exposed to the drawbacks of cryptocurrencies without benefiting from correspondingly strong advantages. A well-governed two-tier system to be achieved through innovation in payment infrastructures might be, in turn, more preferable. Regulated competition by new players combined with “traditional” deposits and central bank elements remains essential, although central banks should embrace the technologies underlying cryptocurrencies, because risk payment service providers could move to other currency areas considered to be more appealing for buyers and sellers.

We do not see specific limitations besides the fact that the following is for sure a broad field of scientific research to be covered, which is at the same time at the origin of ongoing developments and findings. Originality and implications of the paper are, instead, not only represented by its conclusions (which highlight the role of traditional payment instruments and stress why the concept of “money” still has to have specific features) but also by its approach of recent literature's review combined with equally strong logical-analytical insights.

In the light of these considerations, even the role of traditional payment systems like paper money is by far not outdated or cannot be – at this point, at least – replaced by central bank digital currencies (whose features based on dematerialization despite being issued and guaranteed by a public authority are very different).

No matter which form it might assume is what differentiates economic from barter transactions. This conclusion is by far not tautological or self-evident since the notion of money has historically been a great object of scientific discussion. In the light of increasingly modern payment instruments, there is no question that money and the effectiveness of related monetary policies have to be also explored from a social perspective according to different monetary scenarios, ranging from central bank digital currencies to private currencies and cash restrictions/abolition.

The originality/value of the following article is represented by the fact that it (1) refers to some of the most relevant and recent contributions to this research field, (2) moves from payment systems in general to their newest trends like cryptocurrencies, cash restrictions (or, even, abolition proposals) and monetary policy while (3) combining all elements to reach a common picture. The paper aims at being a comprehensive contribution dealing with "money" in its broadest but also newest sense.

Purpose – Present a history of interaction (1947–1996) between a remote nonmarket rural economy in the Papua New Guinea (PNG) highlands and capitalism, first via colonialism and then in the post-Independence period. The Irakia Awa sought to create an alternative local version of modernity in a context of limited opportunities for participation in the monetized market economy.Design/methodology/approach – Ethnographic, multi-temporal field research, totaling two years in residence, focused on sociocultural changes associated with reallocations of land and labor to cash-cropping (coffee), wage labor migration, and new place-based cash-generating initiatives.Findings – After more than three decades of intensive participation in labor migration, the most lucrative option available for earning cash, Irakians deemed it futile, as well as detrimental to the overall well-being of their home community. They dramatically reduced labor migration levels, increased smallholder coffee production, and set about creating a more modern and inviting village lifestyle.Research limitations/implications – This is the historical experience of one rural community in the remote PNG highlands up to the mid-1990s, but is framed around ongoing issues confronting many rural communities engaging with capitalism in PNG.Originality/value – This account presents original field research and contributes to the growing literature on PNG rural peoples with limited opportunities to participate in the cash market economy within a larger context of government policies and malfeasance that have rendered many rural communities largely “invisible.” It suggests substantial reforms are needed before all citizens can enjoy benefits from engaging with capitalism.

The purpose of this study is to examine the impact of financial distress (FD) on investment-cash flow sensitivity (ICFS) of Indian firms.

The study uses the system generalized method of moments (GMM) technique to investigate the effect of FD on ICFS of Indian firms during the period from 2001 to 2019.

Using FD measures like Ohlson's bankruptcy method, Altman's Z-score model and financial-distress ratio, the researchers find that FD increases ICFS and negatively affects corporate investment. The researchers’ findings explain that FD increases restrictions on external financing, which makes cash flow more important for corporate investment. Additionally, the researchers find that the effects of FD on ICFS are weak (strong) for bigger and group affiliated (smaller and standalone) firms. The study’s findings are robust to several measures of FD, group affiliation and firm size.

First, the researchers find that FD affects the ICFS, therefore, financially distressed firms should have sufficient internal funds or external funds for investment. Second, lending agencies should also consider the firms' FD condition before providing funds to secure their money. Third, investors should be very careful while investing in a financially distressed firm as we find that financially distressed firms face a decline in their investment which might reduce firm profitability.

This study contributes to the existing literature by providing empirical evidence by analyzing the impact of FD on ICFS in the context of India. As per the authors’ knowledge, this is the first-ever attempt to examine the effect of FD on ICFS.

The current analysis aims to explore the role of cash holdings in the nexus of national governance and capital investment (CIN).

To achieve this aim, the authors sample the nonfinancial enterprises from 5 Brazil, Russia, India, China, South Africa (BRICS) economies and employ system generalized method of moments(GMM) models as an estimation technique.

The empirical analysis infers that national governance has a positive relationship with CIN and a negative relationship with cash holdings. The cash holdings negatively determine CIN. However, the cash holdings show a positive relationship with CIN in the presence of the national governance index (NGI).

The important policy layout of the current analysis is that corporate managers should reduce cash holdings during better governance situations. Alternatively, corporate managers can disentangle the negative impact of bad country governance conditions on CIN by holding more cash.

The study is innovative as it explores mediating impact of cash holdings in the NGI-CIN nexus.

Notes the real estate development process involves three major groups – a consumer group, a production group and a public infrastructure group. Comments that a major limitation shared by all groups is that each has a cash cycle enterprise which must remain solvent to survive. Concludes that the best risk management device for the producer group is through research so that the development product fits as closely as possible the needs of the tenant or purchaser, the values of the politically active collective consumers and the land use or the ethic of the society.

This paper aims to explore the applicability of Systems Dynamics Methodology (SDM) to the formulation of long‐range cash flow policies. It also explains how the information generated from the model aids in understanding the behaviour of cash flow through time and helps in determining cash deficits, excess cash, including timing, and the contruction of cash budgets under different cash control policies. After a brief introduction which explains the basic ideas behind SDM, the structure of the model is developed and described and the results of a hypothetical example analysed. This is followed by some comments on practical aspects of implementing the model in real life and its potential for cash flow planning and control.

This paper aims to explore the applicability of Systems Dynamics Methodology (SDM) to the formulation of long‐range cash flow policies. It also explains how the information generated from the model aids in understanding the behaviour of cashflow through time and helps in determining cash deficits, excess cash, including timing, and the contruction of cash budgets under different cash control policies. After a brief introduction which explains the basic ideas behind SDM, the structure of the model is developed and described and the results of a hypothetical example analysed. This is followed by some comments on practical aspects of implementing the model in real life and its potential for cash flow planning and control.