You are describing the possible collection of circ*mstantial evidence, not systemic surveillance inherent to cash. Completely different thing than the transaction logs of electronic money transfers. There is a reason why governments don't want large cash transactions. It enables illegal sales, tax evasion and money laundering. Dude/ette, if you think the police can track a single 20€ bill that precisely, they wouldn't have a problem seeing through 500k€ cash deals when drug money goes legit through real estate. Basically every restaurant and cafe on earth uses cash to do creative accounting.
However, of course, there are particular crimes where money tracking does matter. If you rob a bank or break into an ATM your cash prize comes with strings attached, as those known bills will get flagged. I think the most important implication would be these bills becoming actual evidence instead of an happenstance mysterious cash finding. If a bank scan finds them in circulation again, they may be able to narrow down your location, do statistics with mobile network data and so on, but it's not like every note is tracked by default at every endpoint.
Crime runs on cash. How often have you read about anyone getting caught on cash serials??
Why on earth would any commercial store invest in cash tracking? They only got one point of the cash flow, are you implying they are all connected in some grand conspiracy?? Such stores got an abundance of way more accessible and relevant customer data they could (super illegally) collect, like biometrics, RF device IDs, loyalty programs, ... I also never seen a self checkout store which accepted cash at all.
You are telling a fatalist narrative which only helps the abandonment of cash, especially for small, daily transactions, which matter most for privacy.
Crypto won't happen. Lol.
