ECB trying to caution Euroarea Governments over war on cash…

Interesting developments in Euroarea.

Both Portuguese and Belgian Governments are trying to be aggressive over their war on cash. They recently took more measures and asked ECB to share its opinion on their meaures.

ECB shared its opinion (Portuguese here and Belgian here.) In both, ECB has a common thing to say:

Limitations on cash payments should, therefore, be proportionate to the objectives pursued and should not go beyond what is necessary to achieve such objectives, especially in view of the fact that the measures set out in the second draft law also affect transactions between natural persons and involve payments for relatively small amounts. Any negative impact of the proposed limitations should therefore be carefully weighed against the anticipated public benefits. When considering whether a limitation is proportionate, the adverse impact of the limitation in question should always be considered, as well as whether alternative measures could be adopted that would fulfil the relevant objective and have a less adverse impact8
Furthermore, it should be borne in mind that the ability to pay in cash remains particularly important for certain groups in society that, for various legitimate reasons, prefer to use cash rather than other payment instruments. Cash is generally also appreciated as a payment instrument because it
is widely accepted, fast and facilitates control over the payer’s spending. Moreover, it is a means of payment that allows citizens to instantly settle a transaction in central bank money and at face value, without the legal possibility to impose a fee for the use of this means of payment. Additionally, cash payments facilitate the inclusion of the entire population in the economy by allowing it to settle any kind of financial transaction in this way.

This is interesting. In most other cases, central banks are seen joining hands with Governments over war on cash. ECB is trying to be somewhat different. One of its officials even pointed how banking sector and other interested parties are lobbying for abolition for cash.

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