[s_dev]

>The banks have been pushing for a cashless society for awhile now.

Since the first loan was regulated banks have been pushing for a cashless society. Your comment is very much an understatement. It is the holy grail of the financial industry.

Because of the liquidity ratio. Banks are supposed to have 10% of their total lending in cash. This is to prevent a run on the bank.

No cash means banks can lend an infinite amount of money as they aren't bound to the liquidity ratio.

Basically it removes the ceiling from what a bank can earn as there can never be a run on the bank.

[aninhumer]

I think you're conflating cash meaning the physical currency and cash meaning the liquid asset here?

A cashless society is about the former, and as far as I know, the 10% limit is about the latter?

(EDIT: I believe in some systems the banks do technically have physical currency in the form of special high value notes, but they're not really cash in any practical sense)

[gruez]

>No cash means banks can lend an infinite amount of money as they aren't bound to the liquidity ratio.

that's not how fractional reserve works. banks have capital requirements (some of which may be cash), not cash requirements. moreover, even if it was somehow cash requirements, they're not obligated to hold physical cash.

[cat199]

To all the downvoters of this persons comment quibbling about the word 'cash' - please focus on the general concept of 'how can you have a bank run without a commodity store of value outside of the bank account itself' please...