The PSOE government has brought to Congress a proposal to gradually eliminate cash. It is not the first time that payment in notes and coins has been questioned, but the coronavirus crisis has once again provided a boost for those who advocate its elimination.

Despite the fact that central banks have tried to demonstrate that banknotes do not retain the virus any more than, for example, the plastic on a card, cash has lost support these days. This is the case of the Xunta de Galicia, who in the face of the “new normal” have announced that “payment by card or other means that do not involve physical contact between devices will be promoted.”

This is what the Government is proposing regarding cash, what limitations exist in the rest of the countries of the European Union and what is the position of the European Central Bank on limiting cash.

What the government plans

In the Bulletin of the Congress a proposal of law of the PSOE is included where it advocates the “gradual elimination of the payment in cash, with the horizon of its definitive disappearance”. A measure that is framed within the prevention and eradication measures to face the economic and social crisis.

As described by socialist sources in El País, “short-term legal changes” are not sought. Although, it is reported that the Ministry of Finance plans to reduce cash payments from 2,500 to 1,000 euros.

Since October 2012, Spain establishes a “general limitation on cash payments for operations starting at 2,500 euros. It is excluded from the limitation on payments made when none of the parties to the operation act as an entrepreneur or professional. ”

From the Government they explain that the current limit in force has never aroused complaints in the affected groups and that other neighboring countries such as France or Portugal, have a lower limit (1,000 euros, since 2015 and 2017 respectively).

In 2019, the Treasury presented a preliminary project to lower the limit from 2,500 to 1,000 euros, the maximum limit for cash payments, made by professionals. With fines against violators for 25% of the amount paid. An amount the ECB considered then “disproportionately high”. With the preliminary project, the Government aspired to raise 218 million euros in 2019, a quarter of all the revenue entrusted to the anti-fraud plan.

What is the position of the European Central Bank

On February 1, 2019, the European Central Bank issued an opinion on limitations on cash payments, in response to the request of the Bank of Spain, on behalf of the Secretary of State for Finance.

The ECB expressed that “the possibility of paying in cash continues to be very important for certain social sectors that, for various and legitimate reasons, prefer to use cash instead of other means of payment. It is widely accepted and fast and allows the payer to control their In addition, it is a means of payment that allows citizens to settle operations instantly, and the only means of payment in cash from the central bank and at its nominal value that does not entail the legal possibility of charging a commission for its use. cash payment does not require a functional technical infrastructure and can always be used, which is very important in case of interruption of electronic payments. ”

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The non-binding position of the ECB remains in force today as no more up-to-date document has been published. According to the Central Bank, the 1,000-euro limit “makes it difficult to settle legitimate transactions and jeopardizes the concept of legal tender currency enshrined in the Treaty.”

On the part of the European Commission it is pointed out that “a denial of this form of payment should only be possible if it is based on reasons related to the principle of good faith, such as the retailer having no changes available”.

In an article published in 2018, the Commission concluded that “at this time, the Commission is not considering any legislative initiative on this matter. Restrictions on cash payments are a sensitive issue for European citizens, many of whom see the possibility to pay in cash as a fundamental freedom, which should not be disproportionately restricted. ”

What limitations on cash are there in Europe

From the European Union some limitations are established with cash. “As long as it is for your personal use and not for resale, there are no limits to what you can buy and take with you when traveling between EU countries.” This changes if you plan to enter or leave the EU with 10,000 euros or more in cash. In this case, it must be declared before the customs authorities. “When you travel in the EU, you may need to do the same, since cash controls are also carried out within the borders of some countries within the EU,” the EU recommendations explain.

These are the different limitations that currently exist in cash payment:

  • Spain: limit of 2,500 euros for residents and 15,000 for non-residents.
  • Portugal: Cash payments of more than 1,000 euros must be accredited by the bank.
  • France: limit of 1,000 euros for residents and 15,000 for non-residents. Payments at government offices such as fines and other fees are limited to 300 euros in cash.
  • Italy: limit of 3,000 euros, since 2016.
  • Belgium: limit of 3,000 euros, since 2014.
  • Croatia: limit of 15,000 euros.
  • Greece: limit of 1,500 euros.
  • Czech Republic: CZK 350,000 limit, about 14,000 euros. Limit of 50 coins.
  • Poland: limit of 15,000 euros.
  • Romania: limit of 10,000 RON / person / day, one 2,260 euros.
  • Slovakia: limit of 5,000 euros.

In other countries such as Germany there is no limit to the payment in cash, although consumers who want to make payments of more than 10,000 euros are required to register their identification, with the name and date of birth. A mechanism similar to that of the United Kingdom with payments of more than 15,000 euros.

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