Cash Abolition. Opportunities and Risks on an International Level

Bachelor Thesis , 2016 , 51 Pages , Grade: 2,0

Economics - Monetary theory and policy

Cash has been an important basis for economic transactions between companies and consumers for centuries. Contracts for the purchase or sale of goods and services are concluded and settled via payments. Despite differences in payment behavior, banknotes and coins are a widely used means of payment across continents. As such, cash is a basic prerequisite for economic prosperity. Nevertheless, its continued existence has been called into question for some time by a number of renowned economic players. According to them, abolishing cash would, among other things, reduce organized crime and increase the scope of action of central banks.

Abolishing cash would make people in today's networked society even more transparent and controllable for various companies and states. Bergmann looks at the opportunities and risks of abolishing cash and refers to economists and economic actors such as Peter Bofinger and Kenneth Rogoff in this publication.

Table of contents

Abstract

List of abbreviations

1. Introduction

2. Basics of cash
2.1 Origin of cash
2.2 Definition of book money
2.3 Functions of cash
2.4 Advantages and disadvantages of cash

3. Current worldwide developments
3.1 Current debates in the European Union
3.1.1 Discussion on the abolition of larger banknotes and small coins
3.1.2 Introduction of cash payment caps
3.2 Important information in an international context

4. Opportunities and goals of a cash abolition
4.1 Officially stated reasons
4.1.1 Organised crime (such as terrorism, drug trafficking and money laundering)
4.1.2 Undeclared work and tax evasion
4.1.3 Cost savings
4.1.4 Other Benefits
4.2 Possible unofficial reasons and backgrounds
4.2.1 Enforceability of negative interest rates
4.2.2 Boosting consumption

5. Requirements for a possible abolition of cash

6. Possible risks and side effects of cash abolition
6.1 Emergence of shadow currencies
6.2 Restriction of citizens' freedom
6.3 Security risks of cashless payment systems
6.4 Self-control and consumer behaviour of citizens

7. Alternatives to cash
7.1 Pure bank money - Digital payment systems using the example of mobile payment
7.2 The sovereign money initiative in Switzerland
7.3 Virtual currencies using the example of Bitcoins

8. Future role of cash as a means of payment

Appendix

Bibliography

Abstract

For centuries, cash has been an important basis for economic transactions between companies and consumers. Contracts for the purchase or sale of goods and services are concluded and settled by means of payment. Despite differences in payment behavior, banknotes and coins are a widely used means of payment across continents. As such, cash is a basic prerequisite for economic prosperity. Nevertheless, its continued existence has been called into question for some time by various renowned economic players. According to them, abolishing cash would, among other things, reduce organized crime and increase central banks' room for maneuver. These opportunities, together with an analysis of the risks, form the core of this paper. In modern, networked societies, people are already highly controllable and would become even more transparent for companies and states. Likewise, high network vulnerability, especially due to increased digital payments, can lead to security risks. This is another reason why certain preconditions are discussed that would have to be created in the run-up to the abolition of cash. The fact that electronic forms of payment and new innovative technologies are becoming increasingly available as alternatives makes the abolition of cash seem within reach. This paper will examine the extent to which this is actually possible

List of abbreviations

app Application

BaFin Federal Financial Supervisory Authority

GDP gross domestic product

EU European Union

ECB European Central Bank

IMF International Monetary Fund

NFC Near field Communication

AUTOMOBILE automobile

POS Point of Sale

Million. millions

Billion. billions

1. Introduction

This paper deals with the theoretical possibility of abolishing cash. This would have a significant impact on the world of business and finance, since considerable parts of economic trade are still based on cash. Various economists and economic actors, such as the German economist Peter Bofinger and the American economist Kenneth Rogoff, have been questioning its continued existence for some time. According to them, abolishing cash has various objectives, such as making terrorist financing and illegal transactions more difficult.¹ The scope for monetary policy would also be expanded by such a step, in which negative interest rates could be comprehensively enforced. This is also likely to stimulate the economy.²

To begin with, the reader should get an overview of the basics of money. How did it come into being, what is its purpose and what advantages and disadvantages does it offer. In order to gain a deeper insight into the creation of money and to learn background information about current developments in the EU and in the international context, fundamental differences are explained in the third chapter. In this thesis, the different payment procedures of the various nations are repeatedly discussed by way of example. This information is based on an international study of cash usage. Due to the strong globalization and the resulting strong networking of states, companies, central banks and private individuals, the interrelationships and backgrounds are complex. A key point is the analysis of the opportunities and risks of a possible cash abolition. The opportunities of a cash abolition in chapter four are in line with the objectives pursued in this context. In order to make it possible to abolish cash in the first place, it would be essential to create a number of general and technical conditions. Chapter seven then presents possible alternatives to the existing cash system. Mobile payment and the virtual currency Bitcoin are the main focus here, as these electronic innovations offer the opportunity to significantly change the existing economic and financial system. Finally, the findings from this work are summarized and the future role of cash is discussed.

In principle, this paper often refers to European countries and studies by the European Central Bank and the Deutsche Bundesbank. Nevertheless, international developments are interspersed time and again.

2. Basics of cash

2.1 Origin of cash

The history of today's means of payment began many thousands of years ago and has always adapted to current circumstances. It all started with commodity or natural money, which was settled by barter transactions. However, the exchange of commodity for commodity severely limited many transactions because suitable barter items were not always available. Multiple exchanges between different people to obtain the matching good lengthened the payment process and thus increased costs. Because of this, by the 18th century, precious metals, primarily gold and silver, but also bronze and copper, had established themselves as the new means of payment. These have the advantage that they are only available in limited quantities, require little storage space, are easily divisible and do not spoil.³

With the advent of paper money, however, the importance and distribution of gold and silver coins changed. In 1483, paper bills were used in Spain, the first time in Europe, to replace missing coins. These were based on the confidence that paper was a bill of exchange that could be exchanged at any time for silver coins and later only for gold coins. With the international spread of paper money also began the establishment of various central banks. After the Second World War, an agreement was then concluded between 44 countries, including all the major industrialized nations. In this so-called Bretton Woods Agreement, the gold standard was established internationally. The central banks, as the issuers of the banknotes, had to guarantee to own a corresponding amount of gold. This amount had to be exchanged at the request of the paper money holder, above a certain minimum amount set by law. The reliance on paper money during this period was based on the existence of sufficient gold stocks in central bank vaults. This is why it was also referred to as covered paper money.⁴

The termination of the Bretton Woods Agreement in 1971 by U.S. President Richard Nixon led to the worldwide abandonment of the gold standard in the following years. From then on, currencies were no longer backed by gold and the central banks of all countries were thus able to create monetary assets very easily. This created our current paper money system and currencies became fiat currencies (lack of backing of currency by real values). Citizens' confidence in the creditworthiness of their government is the foundation of the fiat money system.⁵

The central bank of the respective country is the sole authority entrusted with issuing coins and bills. The Bundesbank Act §14 states that euro banknotes and circulation coins are the only unrestricted legal tender in Germany. These are issued by the national central banks and are predominantly put into circulation by the commercial banks. Unless otherwise regulated in individual cases, no one can refuse them as legal tender.⁶

2.2 Definition of book money

The distinction between cash and book money is becoming increasingly important in times of increasing digitization and expansion of the money supply. Cash consists of the banknotes and coins in circulation issued by the respective central bank. Commercial banks, in addition to central banks, are also granted the right to create money by granting a loan to a customer and crediting the money to the customer's loan account. Money can be generated out of nothing by simple accounting transactions. This so-called giral or book money has the same purchasing power as banknotes and coins.⁷ However, there is no direct legal regulation of book money, as it is not legal tender. Excessive book money creation by commercial banks could jeopardize the price stability objective pursued by the Eurosystem. Therefore, the Eurosystem has monetary policy instruments, such as minimum reserve requirements and open market operations, which can be used to maintain price stability. The minimum reserve requirements mean that banks have to secure the loans they grant by holding balances with the central bank.⁸

The creation of book money has been greatly simplified in recent years, so that only a fraction of the loans they extend need to be backed by deposits. One example of this is the reduction of the minimum reserve ratio by the ECB in 2012 from two percent to one percent. Accordingly, a multiple of the minimum reserve deposited can be granted as loans.⁹

Around 80 percent of the money supply in the euro zone is now created by monetary institutions. The book money put into circulation does not exist physically, but only electronically. National central banks produce only 20 percent of the EU's total money.¹⁰ Chapter 7.2 discusses this issue in more detail by explaining the Swiss full money initiative.

2.3 Functions of cash

Cash, as a manifestation of money, fulfills various economic functions. First and foremost, it is a medium of exchange that facilitates the exchange of goods. Here, it serves as a yardstick or unit of account for the relative value of goods and services.¹¹ It is also the most widely used means of payment for the purchase of goods and services in most parts of the world. As such, it is generally accepted and thus creates a basic prerequisite of economic prosperity.¹²

Another function of money is the store-of-value function. The purchase and sale of goods and services can diverge in time if goods do not have to be exchanged directly. Money therefore serves as a store for later exchange. Saving in particular relies on this function. This is because saving transfers wealth over time and forms a reserve for later needs.¹³

In addition to its function as a store of value, many people consider its value preservation function to be very important, especially in times of crisis. Demand for cash usually increases in the wake of financial crises. For example, banknotes in circulation doubled between October 2007 and October 2008, and the Deutsche Bundesbank paid out €11.4 billion in cash in October 2008 alone (the month of the Lehman bankruptcy).¹⁴ Finally, it is also highly valued as a tool for expenditure control and budget planning.¹⁵

2.4 Advantages and disadvantages of cash

Furthermore, in addition to the above-mentioned functions, cash also brings a number of fundamental advantages for consumers. Cash ensures anonymity when transactions are carried out. As a result, third parties cannot trace the nature and scope of the underlying transaction. In addition, cash payments enable the user to keep a good check on spending and can mitigate purchasing behavior. Thus, cash is the most transparent means of payment due to the physical transfer of value.¹⁶ It also has a uniform value and enables immediate and final contract fulfillment without any further involvement of service providers.¹⁷ With it, fast payments are possible and it is declared by users to be safe and easy.¹⁸ A particularly important advantage is that cash can be used as a means of payment even without a technical infrastructure in the event of natural disasters or a power outage.¹⁹ Furthermore, the use of cash does not require any significant access restrictions. Even in countries where citizens are prevented from opening a checking account, payment can be made with banknotes and coins.²⁰

In addition to the many positive aspects of cash, there are also disadvantages. For example, scientists at Oxford University found that an average banknote contains around 26,000 potentially harmful bacteria.²¹ These could cause various diseases. Furthermore, the storage of large amounts of cash in the home poses a risk to citizens. Fires, thefts and the loss of banknotes may occur. In addition, there is the possibility of cash being stolen from wallets. As a further disadvantage, cash leads to high transaction costs. Starting with production by the national central banks, there are also costs for cash storage and supply by service providers. These are passed on, at least in part, by companies in the form of higher product prices and are thus passed on to customers.²² Cash, especially banknotes, can also be counterfeited by criminal structures. The addition of these counterfeits causes damage to the population of the country concerned. The volume of counterfeit currency in the euro area is relatively low. The damage caused by counterfeit banknotes amounted to €39.1 million in 2015. Measured against the €1,100 billion in regular circulation, this is only 0.004 percent.²³

3. Current worldwide developments

Various reports by economists and other players discuss the future economic significance of cash, also against the background of the growing availability of cashless means of payment.²⁴ These include well-known names such as Willem Buiter, chief economist at Citigroup, economist Peter Bofinger, Larry Summers, former chief economist at the World Bank, and a U.S. economist from Harvard named Kenneth Rogoff, who used to work at the IMF. These and other economic experts point to the advantages of a cash-free world. Even an institution like the Bank of England recently called for the abolition of cash.²⁵ This chapter will first address some current developments in the European economic area and then take a look at the international level.

3.1 Current debates in the European Union

3.1.1 Discussion on the abolition of larger banknotes and small coins

In recent years, the fight against organized crime, the shadow economy and tax evasion has increasingly become the focus of political attention. Their detection is naturally difficult, as the activities aim to remain hidden. A current debate has been sparked in the EU about the abolition of the 200 and 500 euro banknotes. In the current context of European politics, there is, despite everything, no discussion about a complete abolition of cash. Instead, the focus is on restricting cash payments at the point of sale, and on abolishing small coins and the largest banknotes.²⁶

Basically, it is pointed out that cash, especially in larger denominations, is easy and easy to transport and cannot be traced back to its origin. Accordingly, the abolition of the largest banknotes is intended to help combat tax evasion and crime.²⁷ Thus, using tax evasion as an example, we can see that transporting larger sums of cash in smaller bills is much less attractive because of the increased space required. With regard to criminal energies, reference is made to the high level of cash holdings. It is estimated that only 25 to 35 percent of euro cash is used for domestic transactions. The remaining cash is hoarded or circulates outside the euro area.²⁸ Since, in addition, around one-third of the euro cash in circulation consists of 500-euro banknotes and these are rarely used, cash critics conclude that there is a large amount of undesirable activity.²⁹ This is also true in comparison with countries outside the EU, such as Japan or the USA. The amount of cash per citizen, whether man, woman or child, is close to $4,000 in America. Here, more than 80 percent of the cash in circulation is even held in large banknotes.³⁰

However, it should be noted that there are also some points in favor of continuing to provide the largest European note sizes. For one thing, they can be very useful for one-time, high-value payments. In addition, high-denomination banknotes are used to a particular extent for store of value. One aspect that also receives too little attention in this discussion is the fact that smaller-denomination banknotes are also used for unwelcome activities. These would shift to smaller denominations if only the 200 and 500 euro banknotes were abolished. Therefore, in these constellations, supposedly only an abolition of the entire banknotes would promise success.³¹

Nevertheless, at its last Council meeting on May 4, 2016, the ECB decided to stop printing 500-euro bills from the end of 2018. According to the ECB, the bills in circulation will remain legal tender and can be exchanged for an unlimited period. This step will slowly take them out of circulation.³² The decision to gradually abolish the 500-euro banknote will not result in any significant changes for citizens. This is because cash is rarely used for large payments anyway. Although cash is mostly used for small payments, non-cash payment instruments are often used for higher-priced purchases.³³ This is underlined by an analysis of payment behavior in Germany by the Deutsche Bundesbank. For payments with a transaction value of up to 20 euros, only around 4 percent are settled using non-cash means of payment, whereas the figure rises to around 76 percent for transactions with a value of 500 euros or more.³⁴ The abolition of the largest banknote is therefore not a tragedy for the population. This can also be seen from the fact that in other nations, banknotes are already much smaller in denomination. In Great Britain, the largest note has been 50 pounds for many years, and in the case of the United States of America, 100 U.S. dollars.³⁵

In addition, some economic experts are proposing the abolition of 1- and 2-cent coins and an introduction of a rounding rule. This current discussion is about a possible reduction in the cost of payment transactions. Reference is made here to other countries in the euro area, such as the Netherlands or Denmark, which use a rounding rule. In these, the invoice amount is usually rounded up or down to 5 cents for transactions. The small coins are mainly needed to give change to the cent in retail transactions. Doing away with the smaller 1- and 2-cent coins could make cash payments easier for retailers and also lead to cost savings.³⁶ This thesis was refuted by the EHI Retail Institute in a study conducted on behalf of the Deutsche Bundesbank. Based on the comparison of benefits, the slightly reduced logistics costs are offset by the increased demand for 5 and 10 cent coins of the rounding rule. As a result, and taking into account that other denominations experience increased sales, there is no significant cost reduction here.³⁷ There is also a mixed picture in the surveys of the parties concerned. In a general population survey conducted by the European Commission in 2015, no clear sentiment emerged.³⁸ For this reason, too, an abolition of small coins and an across-the-board rounding rule do not appear necessary.³⁹

Overall, there are arguments both for and against the provision of larger banknotes and small coins. No compelling reasons can be found for a further change in the existing denomination structures following the Governing Council's decision.⁴⁰

3.1.2 Introduction of cash payment caps

In addition to the current debate on the abolition of larger banknotes, cash payment caps were introduced in large parts of the EU several years ago. These restrictions are not the responsibility of the respective central bank, but rather of policymakers.⁴¹ As shown in the chart in Annex 1, these payment restrictions are already in place in the countries listed below. Among other things, these regulatory measures on payments are intended to help discourage tax evasion, undeclared work and other illegal business. They would also cause considerable problems for money launderers, according to Sebastian Fiedler, deputy chairman of the Association of German Criminal Investigators. By introducing a cash payment cap, jewelers or used car dealers, among others, would no longer be allowed to accept large amounts of cash. Thus, a second criminal would be needed to play along with a possible circumvention of the upper limit.⁴² The cap would mean that electronic money would have to be used, and this could then no longer be used for hidden purposes because of the lack of anonymity, according to the idea.

The first of these was Greece in 2011, when the government in Athens imposed an upper limit of 1,500 euros on cash transactions for the first time. Subsequently, Italy, France and Portugal set their limits at 1,000 euros on the basis of a directive on the traceability of financing. Italy raised this again to EUR 3,000 at the beginning of the current year. In addition, cash payments in excess of EUR 2,500 between consumers and merchants have been prohibited in Spain since October 30, 2012, and the Czech Republic, Poland and Slovakia have also followed suit. Most recently, Belgium reduced the permissible cash amount for the purchase of goods and services from 5,000 euros to 3,000 euros at the beginning of 2014. Swedish, Danish and Finnish retailers can even refuse to accept cash altogether. However, this will be discussed in more detail in a later section. In Hungary, Estonia, Latvia, Lithuania, Finland, Sweden, Denmark, the Netherlands, the United Kingdom, Slovenia, Austria and Germany, there are currently no restrictions on cash payments.⁴³

However, the introduction of a cash payment ceiling of 5,000 euros is also currently being discussed in German political circles.⁴⁴ The extent to which this will be defined and the date from which it could apply are not yet foreseeable. In the event of non-compliance with the rules on cash payments, those involved face high penalties of up to 40 percent of the payment, as is the case in Italy, for example.⁴⁵ Nevertheless, an evaluation of the effectiveness of the cash payment caps introduced in the above-mentioned countries is still pending. The extent to which these actually help to reduce undesirable activities is therefore still unclear.⁴⁶

As explained in the previous section, it should nevertheless not be forgotten that cash is mainly used by citizens for small amounts. Consumers already pay for higher-value goods to a considerable extent without cash. It can be concluded from this that the vast majority of payment transactions are not affected at all by a cash payment cap.⁴⁷ As in the debate on large banknotes, there are therefore supposedly no serious disadvantages for the citizen, but possible advantages for the entire population.

3.2 Important information in an international context

In an international comparison, there are major differences in the use of cash and non-cash means of payment. In order to be able to make a judgment on the possible abolition of cash, this section presents some basic information. National payment habits that have developed over time result from an interplay of various influencing factors. These depend on the preferences of both the payment recipients (retailers) and the payers (customers) in the respective countries. Furthermore, the subsidization of digital payment methods by the state plays an important role and how strongly they are advertised by the media.⁴⁸ In some countries such as Australia, France, Canada and the Netherlands, card providers, banks and retail associations have launched nationwide advertising campaigns for payment by card. These have a strong influence on payment behavior.⁴⁹

This is confirmed by a new study that analyzed internationally comparable data from payment diaries from 2009 (Canada) to 2012 (USA). More than 18,500 consumers in Australia, Canada, France, the Netherlands, Austria, Germany and the USA recorded their payments in writing and noted which means of payment they used. The study shows that cash is still heavily used for small-value payments in all the countries surveyed.⁵⁰ In Austria and Germany in particular, cash transactions are still very widespread, accounting for 82 percent in each case. This is also illustrated by the chart in Annex 3, which shows the share of cash transactions in the total number and value of transactions.⁵¹

Nevertheless, this reveals significant differences in payment behavior between the countries. The average number of payment cards in Canada and the United States of America is 3.5 and 4.2, respectively, which is more than twice as high as in the comparison nations.⁵² This shows a reduced use of cash, for example in supermarkets. The proportion of cash in relation to the total number of transactions at the point of sale is only 53 and 46 percent.⁵³

The trend in Scandinavian countries such as Sweden and Denmark is very similar. The use of cashless payment methods is even more pronounced here.⁵⁴ According to a study from 2012, the Danish retail sector already reports 84 percent of its transactions as cashless transactions.⁵⁵ Furthermore, the Danish government would like to exempt retailers from the legal obligation to accept cash as of 2017, during a three-year test phase. Gas stations, restaurants and other smaller stores will no longer have to accept cash in the future.⁵⁶ Cash is on the retreat here at a rapid pace. Due to insufficient demand, the Danish central bank will no longer print new banknotes from 2017.⁵⁷

A similar development can be observed in neighboring Sweden. In the Swedish university city of Uppsala and in hundreds of Swedish churches, church collections have been collected via a collection machine instead of a bell bag for several years.

[...]

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¹ cf. Deutsche Bundesbank (2015), p. 25.

² cf. Rogoff (2014), p. 2 f.

³ cf. Kerscher (2014), p. 23 f.

⁴ cf. Kerscher (2014), p. 24 ff.

⁵ cf. Kerscher (2013), p. 29 ff.

⁶ cf. Deutsche Bundesbank (2015), p. 27 f.

⁷ cf. Deutsche Bundesbank (2016a), p. 4.

⁸ cf. Deutsche Bundesbank (2016b), p. 1.

⁹ cf. Kerscher (2013), p. 32 ff.

¹⁰ cf. Karwat (2016), p. 1 f.

¹¹ cf. Deutsche Bundesbank (2015), p. 26.

¹² cf. Deutsche Bundesbank (2016a), p. 1.

¹³ cf. Deutsche Bundesbank (2016a), p. 1.

¹⁴ cf. Deutsche Bundesbank (2015), p. 34 f.

¹⁵ cf. Deutsche Bundesbank (2015), p. 31.

¹⁶ cf. Soman (2001), p. 460 f.

¹⁷ cf. Krüger/ Seitz (2015), p. 10.

¹⁸ cf. Krüger/ Seitz (2015), p. 9-12.

¹⁹ cf. Winter/ Wörlen (2015), p. 522.

²⁰ cf. Deutsche Bundesbank (2015), p. 32.

²¹ cf. Siedenbiedel (2014), p. 1.

²² cf. Trütsch (2016), p. 1 f.

²³ cf. Deutsche Bundesbank (2015), p. 28.

²⁴ cf. Deutsche Bundesbank (2015), p. 25.

²⁵ cf. Von Pax (2015), p. 2.

²⁶ cf. Deutsche Bundesbank (2015), p. 25.

²⁷ cf. Rogoff (2014), p. 12.

²⁸ cf. Fischer/ Köhler/ Seitz (2004), p. 4.

²⁹ cf. Deutsche Bundesbank (2015), p. 34.

³⁰ cf. Rogoff (2014), p. 5.

³¹ cf. Deutsche Bundesbank (2015), p. 38.

³² cf. European Central Bank (2016), p. 1.

³³ cf. Deutsche Bundesbank (2014), p. 45.

³⁴ cf. Deutsche Bundesbank (2015), p. 30.

³⁵ cf. Deutsche Bundesbank (2015), p. 37.

³⁶ cf. Deutsche Bundesbank (2015), p. 39.

³⁷ cf. Horst (2015), p. 52.

³⁸ cf. European Commission (2015), p. 23 ff.

³⁹ cf. Deutsche Bundesbank (2015), p. 39.

⁴⁰ cf. Deutsche Bundesbank (2015), p. 38.

⁴¹ cf. Deutsche Bundesbank (2015), p. 38.

⁴² cf. Greive/ Jost/ Tauber (2016), p. 3.

⁴³ cf. Europäisches Verbraucher Zentrum (2016).

⁴⁴ cf. Greive/ Jost/ Tauber (2016), p. 2.

⁴⁵ cf. Europäisches Verbraucher Zentrum (2016)

⁴⁶ cf. Deutsche Bundesbank (2015), p. 38.

⁴⁷ cf. Bagnall et al. (2014), p. 20.

⁴⁸ cf. Winter/ Wörlen (2015), p. 523.

⁴⁹ cf. Jonker/ Plooij/ Verburg (2015), p. 24.

⁵⁰ cf. Bagnall et al. (2014), p. 15.

⁵¹ cf. Bagnall et al. (2014), p. 10.

⁵² cf. Bagnall et al. (2014), p. 13.

⁵³ cf. Bagnall et al. (2014), p. 27.

⁵⁴ cf. European Central Bank (2015a), p. 24.

⁵⁵ cf. Anwar (2015), p. 1.

⁵⁶ cf. Von Pax (2015), p. 2

⁵⁷ cf. Anwar (2015), p. 1.

• College: University of Applied Sciences - Bonn
• Grade: 2,0
• Author: Sebastian Bergmann (Author)
• Publication Year: 2016
• Pages: 51
• Catalog Number: V1189862
• ISBN (PDF): 9783346606679
• Language: English
• Tags: cash, abolition, opportunities, risks, international, level