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A decade ago, the thought of a replacement for cash would have been outlandish to even mention. Today, that isn’t the case at all…


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The Weekend Edition is pulled from the daily Stansberry Digest.


This Could Be the End of Cash as We Know It

By Brian Tycangco, analyst, True Wealth Opportunities: China


Cash, as we know it, is disappearing…

Regular readers know I’m not talking about the unprecedented amounts of “cash” the Federal Reserve has been creating… That keeps growing.

I’m talking about a practical matter… the cash that you hold in the bank. And of course, this also involves the cash you hold in your wallet, sock under your mattress, or keep in your safe.

What if all that cash was suddenly replaced by something else? What if it was replaced by something that’s still considered as good as cash… but not something you can physically hold, tuck away, or even use for a coin toss?

A decade ago, the thought of a replacement for cash would have been outlandish to even mention. Today, that isn’t the case at all…

We already live in a world where cryptocurrencies like bitcoin and Ethereum have been accepted as stores of value. Their combined market capitalizations exceed $1.4 trillion today… To put that in perspective, that’s greater than the annual gross domestic product of Mexico.

But the changing face of cash I’m talking about isn’t driven by cryptos…

Instead, I am talking about a central bank digital currency (“CBDC”)…

The concept of a CBDC is simple… It’s an electronic version of the paper bills and coins you hold in your hand, issued and “printed” by the central bank.

Think of it like this…

All those physical stimulus checks that have been going out across the U.S. could be replaced by a simple electronic transfer. It could be possible even to those folks without a direct-deposit account previously linked to the government through their tax returns.

Imagine a world where every citizen has a CBDC account that’s directly linked to their national government’s “digital printing press.” Goodbye, paper dollars…

CBDCs are closer to becoming reality than you might think…

Central banks all over the world have been looking into the development of their own CBDCs for years. We just don’t hear much about it.

Some central banks want a CBDC to curb illegal activities such as money laundering and the drug trade. Others want to eliminate the cost of printing money and minting coins. The Federal Reserve, for instance, spends about $1 billion each year printing dollar bills. And still, other central banks see CBDCs as a way to “bank the unbanked.”

The idea sounds alien to most of us. But in China and India alone, more than 400 million working adults still don’t have bank accounts and can’t access financial services.

For large countries without a well-developed financial infrastructure, such as India, a CBDC could greatly improve the effectiveness of monetary policy. For example, it can guarantee that the correct people get a tax refund or a stimulus check almost instantly.

Another major attraction for CBDCs among governments is their ability to track how cash flows through the economy. The government would get real-time information on where physical money is being spent the most – like having a CT scan of the economy.

As of last year, five nations (China, Cambodia, Thailand, Ukraine, and Sweden) have test piloted their own forms of CBDC. And one (Brazil) has already launched a payment network called “Pix” that will enable a fully digitized Brazilian real by 2022.

Another five nations (Canada, France, Venezuela, South Africa, and the United Arab Emirates) are currently developing a CBDC, while about a dozen others are now researching a CBDC to use in the future. These countries include Russia, India, Pakistan, Iran, Australia, Germany, the United Kingdom… and even the United States.

We’ve already been preconditioned for this change…

A decade ago, it would’ve been almost impossible to talk about the real possibility of a CBDC that would replace physical cash in circulation.

But the widespread adoption of cashless payment services (or mobile payments) combined with the meteoric rise of e-commerce globally has made CBDC a logical evolution of money as we know it.

We can now actually imagine a world where we don’t use paper bills or coins.

Nowhere is this more evident than in China, the world’s biggest e-commerce market. The country is pretty darn close to being a “cashless society.” And there, two major mobile payment services, WeChat Pay and Alipay, are already being used by a billion people each.

These services function as apps on a smartphone that link to a bank account or can be funded using a credit card. They generate a unique barcode – called a “QR code” – that can be scanned at a cashier to automatically charge your account upon verification. As I shared recently in DailyWealth, the yuan has gone entirely digital.

In the U.S., cash is still king for now. But mobile wallets like Apple Pay, Google Wallet, and Venmo are growing in popularity among Americans. In the U.S., 9% of the population reportedly uses a digital wallet today.

The COVID-19 pandemic served as a catalyst for this evolution…

It’s common knowledge that paper money and coins are among the dirtiest things exchanged by people around the world. The average paper currency is passed on 55 times in a year.

In fact, paper money is known to be able to carry a live flu virus for up to 17 days.

COVID-19 drastically changed the way people all around the world handled cash. Many people opted against using cash altogether, and they also stopped using credit cards.

That’s why in places where mobile wallets and payments were accepted, the use of mobile payments soared dramatically in 2020. Globally, mobile payments grew nearly 50% last year, compared with 2019.


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There are more good sides to not having actual cash…

There’s the obvious benefit of not having to carry cash around that can be lost, stolen, or simply misplaced. It’s neither bulky nor messy. And you never have to worry about counting your bills and coins again.

On a more meaningful level, replacing cash with a CBDC helps to get more people involved in the financial system… by banking the unbanked, so to speak. As I said earlier, many people still don’t have bank accounts… So they’re unable to use financial services that could improve their lives.

And let’s not overlook the impact this could have on e-commerce or the growth of an economy… Anyone who hasn’t been able to buy things online because they didn’t have a credit card or a bank account will be able to take part in the booming e-commerce industry.

For a central bank like the Federal Reserve, a CBDC would be tantamount to having a magic wand for monetary policy. With complete control over the supply of cash, stimulus policies like the $1,400 checks could be distributed within seconds – not weeks. And they could be directed toward select target groups for maximum impact.

But then there’s the ugly side of a digital currency…

The digital aspect of a CBDC makes it easily traceable. Goodbye anonymity.

That’s bad news for drug dealers and money launderers. But it’s equally bad news for the average Joe who wants to buy some gold, silver, or crypto to tuck away without Uncle Sam finding out.

A CBDC in its purest form is probably the most invasive tool of government against our privacy. It’s like having the government point a video camera at your wallet all day, every day.

And this is why I said at the start of today’s essay that the significance of this most overlooked change of 2020 – and the COVID-19 pandemic – cannot be overstated.

The creation of the technology of a CBDC is one thing… The implementation is an entirely different ball of wax.

The speed at which CBDCs will be implemented around the world will no doubt vary greatly…

In places like China and Cambodia – countries with few (if any) privacy rights and where much of the population already doesn’t use cash – it could happen very fast.

By contrast, it will be anything but fast and painless if implemented at all in the U.S. But almost nine out of 10 central banks are now looking at CBDCs in varying stages of conception and development.

Digital payments are fast becoming the rule instead of the exception in retail and wholesale transactions.

The signs are getting clearer and louder that we’re headed for a world where cash is no longer something you can hold but rather see through an electronic device screen – whether it’s a smartphone, a computer, or a CBDC card.

Fortunately, you can take some actions today to prepare for a cashless world…

There’s little point in hoarding physical cash when the very institution that created it ceases to honor it in favor of its digital twin…

You can, however, begin diversifying into assets that still give you a degree of privacy and flexibility that digital fiat currencies aim to destroy.

One way is to start investing in hard assets like gold and silver if you haven’t already done so. As a close friend of mine, an avid numismatic and gold investor, once told me…

There’s nothing like having a few gold coins in your pocket to get you out of sticky situations.

A second idea that’s becoming increasingly attractive is to park a portion of your portfolio in cryptocurrencies like bitcoin. I expect the cryptocurrency will soar in popularity as one central bank after another launches a fully functional CBDC.

That’s because one of the biggest attractions to bitcoin is its use of a decentralized system, where transactions can take place without any need for intermediaries. (No pesky banks needed.)

And since you never use your name, only your cryptocurrency address, you maintain more anonymity than you would with a CBDC.

I think the reality of a CBDC is a long way off for the U.S. But the pandemic flipped what was normal upside down. And the digital-payments trend is going to continue even when the pandemic is over.

Make sure you’re prepared for it.

Good investing,

Brian Tycangco

Editor’s note: What if we told you that the rise of digital assets is shaping up to be a major part of the Melt Up… especially as it surges toward its final peak? It’s part of a huge development that Steve will unveil next week. To learn how it connects, how you can profit, and what this big change to Steve’s Melt Up thesis means for you and your money, make sure you
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