In modern economies there are three types of money
- coins and notes (a.k.a. cash);
- central bank reserves;
- commercial bank credit;
According to Ryan-Collins e.a. the third type is about 97% of the total money supply, while cash only accounts for 3% . Legally “money” on a bank account is not money, but a liability of the bank to the account holder. So if you have $1000 on your bank account, the bank has an obligation to pay you $1000 if requested by you.
Most proponents of a cash-less society forget that if cash is abolished, commercial bank credit will account for 100% of the money supply. (Central bank reserves do not circulate in the economy, and as such can hardly be counted as money.) And without substantial banking reform this will give commercial banks complete control over the economy.
Though there are good reasons for eliminating cash, a cash-less society has several drawbacks. First of all, people are required to have a bank account even to do the meanest transaction. Consequently it will be impossible to do anonymous transactions. And people will be fully dependent upon banks.
It is not true that only criminals are involved in anonymous transaction, there are countless examples of decent citizens doing such transactions. Think about surprising your spouse with flowers.
Nevertheless there is an alternative to both cash and bank credit accounts: stored-value cards. A stored-value card is different from debit and credit cards in that the value is stored at the card and not linked to an external account. This is similar to ink on notes and relief on coins to record value.
Currently stored-value cards are issued privately. We, however, propose that the national monetary authority to issue stored-value cards either instead or along-side cash. These card could be bought at banks, post offices or shops.
Just as in the case of notes and money, certain measures should be taken to prevent counterfeiting stored-value cards. And further it seems to be reasonable to limit the amount of money on such cards to prevent criminals from holding large amount of “cash” out of the system.
 Ryan-Collins e.a. Where does money come from? A guide to the UK monetary and banking system (second edition), New Economics Foundation, London, 2012.