The European Union has struck on a plan to crack down on the use of anonymous payments and virtual currencies so that terrorists can’t use them. The problem is that terrorists aren’t really using them, anyway.
They’re using good old cash, though its circulation is already severely limited in countries such as France — the scene of the most recent Islamic State terror attacks. Instead of taking their anger out on virtual currencies, now is the time for governments to think seriously about the abolition of cash.
Despite the Islamic State’s well-known dislike of the U.S., its financial accounts seem to be kept in U.S. dollars. The terror group’s revenue comes in greenbacks, whether from old-school oil smuggling, “taxes” on subjugated populations or the trade in stolen artefacts. The expenses — such as the purchase of weapons, which are also smuggled into traditional markets such as Belgium from the Balkans’ former war zones, and the payment of fighters’ salaries — also take the form of cash transactions.
They are made possible by the huge amount of U.S. currency that is held overseas, mostly in $100 and $50 bills. In a 2012 paper for the Federal Reserve Board of Governors, Ruth Judson cited estimates of about 50