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The RBA has been forced to say it is not part of a sprawling government conspiracy, amid heated opposition to a proposed ban on cash payments over $10,000

Jack Derwin
  • The Reserve Bank of Australia has defended itself against allegations of conspiracy, after claims made by some opponents of a proposed bill to ban $10,000 cash transactions.
  • Some have speculated the government's bill is to lock Australians into an economy with negative interest rates. Meanwhile, political party the Citizens Electoral Council (CEC) claims Australians' savings will be used to directly bail out banks.
  • The RBA has refuted these ideas, telling a Senate inquiry the claims are far-fetched. However, it doesn't negate more mundane opposition to the bill, with many concerned the ban will infringe on personal freedoms and potentially criminalise ordinary Australians.
  • Visit Business Insider Australia’s homepage for more stories.

No, we're not trying to destroy your personal wealth, the Reserve Bank of Australia (RBA) is promising.

The Black Economy Taskforce's proposal to ban cash transactions exceeding $10,000 has created a serious stir among some groups, with government finding itself accused of engaging in a conspiracy to force Australians into negative interest rates and to gradually eliminate cash altogether.

"With respect, I think some of those concerns that you've alluded to are a little far-fetched," RBA head of payment policy Tony Richards told the last senate inquiry into the bill.

READ MORE: How might negative interest rates work in Australia?

Richards' comments come after the senate reviewed more than 2,600 submissions made by the public into the proposed legislation which would make it illegal to pay an Australian business more than $10,000 in cash – but would not apply to person-to-person transactions. The economics legislation committee, however, declined to publish all entries, citing "a large number and recurring indirect themes presented through a number of email campaigns". Bureaucratic speak for "raving conspiracy theories", perhaps?

Some of the bill's loudest opponents subscribe to the view that the Australian government has designs on Australian savings, by encroaching on and then eliminating the cash economy altogether. Some also hold that Australia's sky-high household debt levels, a product of exorbitant house prices, places it at risk of financial collapse.

https://twitter.com/adamseconomics/status/1204908103885451265

These views, espoused by the likes of economist and prolific tweeter John Adams, promise that in combination these factors will lead to an "economic armageddon" in Australia.

https://twitter.com/adamseconomics/status/1209028445046337537

The theory goes that a cash ban restricts the ability of Australians to bail out of such an economy, by keeping their money unbanked. Some, like minority party the Citizens Electoral Council, go as far as to argue, without substantiating the claim, that the government will bleed Australian deposits to prop up failing banks.

RBA governor Philip Lowe, for his part, has previously stressed the prospect of negative interest rates is pretty unlikely, although maintained that all economic tools were on the table. At any rate, Richards noted that nations overseas that have introduced a negative official cash rate have not charged negative interest on savings.

"There are almost no examples of negative interest rates for household deposits in those few countries that have had negative policy rates," he said.

In addition, Richards directly refuted the notion cash was on the way out entirely.

"The Reserve Bank and the Government have both said in different contexts recently that cash is a very important part of our payment system and our economy," he said.

Of course, it's not just because of out-there conspiracy theories that the cash ban proposal is controversial. There are various groups that oppose a $10,000 cash ban for other reasons – such as claims it erodes personal freedoms without achieving its actual aim: combatting money laundering.

"An outright ban would only negatively affect law-abiding citizens while those engaging in money laundering, deliberate tax evasion or other illegal activities are likely to find other means of exchange, or will continue to use untraceable cash undeterred by restrictions," Institute of Public Affairs research fellow Kurt Wallace said in an opinion piece.

Those views are shared by the likes of the Victorian arm of the Liberal Party, which voted overwhelmingly to abandon the proposal late last year, and the Australian Chamber of Commerce and Industry (ACCI) who cite government overreach and the right of Australians to be able to do with cash as they wish.

Others like Small Business Ombudsman Kate Carnell has called for the ban to at least be delayed, given business staff will need to be trained around the laws, which carry a maximum two-year jail sentence.

Meanwhile, the Law Council of Australia has raised its concerns Australians engaged in legitimate activities could face "potential criminal liability".

So even if the RBA isn't in cahoots with the government in an elaborate effort to swindle Australians – a likely story – the bill still has the kind of holes you could drive a truck through.

READ MORE: Cash was predicted to be dead in Australia as early as 2022, but there are plenty of reasons why it will be king for a while yet