Can the Australian Government legally eliminate physical money?

The question of whether the Australian Government can legally eliminate physical money such as coins and banknotes is more complex than it  appears. At the heart of the issue lies Section 51(xii) of the Australian Constitution, which gives the Commonwealth Parliament the power to make laws with respect to “currency, coinage, and legal tender.” This provision has long served as the foundation for legislation governing Australia’s monetary system, including the Currency Act 1965, which formally defines and regulates the use of coins and notes issued by the Reserve Bank of Australia.

Under this constitutional power, Parliament clearly has the authority to introduce new forms of money, withdraw old denominations, and regulate what is considered legal tender. Indeed, Australia has exercised this power before for example, when one-cent and two-cent coins were removed from circulation in the early 1990s. Similarly, Parliament could decide in future to phase out certain denominations or types of physical currency if they become impractical or obsolete. But eliminating all physical money moving to a system where only digital transactions are permitted would be an unprecedented leap. Technically, Parliament could attempt such a move by passing legislation that removes legal tender status from all physical forms of money. However, this would raise serious legal and constitutional questions, not to mention social and political backlash.

First, there’s the issue of whether such a sweeping change would remain within the bounds of Section 51(xii). The High Court of Australia, which interprets the Constitution, might be asked to determine whether the power to regulate currency also includes the power to eliminate all physical forms of it. That’s not guaranteed. The Court may find that the currency power, while broad, does not extend to removing the entire category of physical legal tender, especially if doing so impairs access to the economy for certain segments of the population.

Then there’s the matter of rights and fairness. While Australia doesn’t have an explicit “right to cash” enshrined in its Constitution, courts have sometimes recognised implied freedoms and protections under common law. If the government were to eliminate physical currency, critics might argue that it infringes on basic freedoms, particularly the ability to transact privately, or discriminates against rural, elderly, or disadvantaged Australians who rely on cash in their daily lives. In such a case, the courts could find the law invalid on other constitutional grounds, or at least demand clearer justification for such an extreme policy.

But what if the government outlawed the use of cash altogether. That kind of move would go well beyond private discretion and enter the realm of national policy and personal rights. In reality, if cash is to disappear from Australia, it’s unlikely to happen by legislative force alone. Instead, the more probable path is a gradual shift driven by economic trends, technological adoption, and policy incentives a slow decline rather than a sudden ban. This approach would likely avoid the legal risks and social upheaval that a direct elimination of cash could trigger. So, while the government does have a constitutional head of power to control and regulate currency, whether that power extends to completely abolishing physical money is debatable and would almost certainly be tested in the High Court. Any such move would raise fundamental questions about democratic accountability, financial access, and the proper limits of government authority in a digital age.

Central Bank Digital Currency (CBDC) in Australia