Cash Payment Limits disempower citizens
March 22, 2023
ICA Position, March 2023
Ahead of the vote in the European Parliament’s joint Committees Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs now announced for 28 March 2023 on a piece of legislation that includes cash payment limits to be applied across the EU, the International Currency Association (ICA), in line with its previous calls for action, reminds policy makers of the risks of cash payment limitations pose to citizens and their rights.
- A Cash Payment Limit undermines efforts to protect cash for those citizens that favour it as a means of payment: it limits the possibility of citizens or companies to make larger payments with cash and forces them to use other means of payment.
- Cash Payment Limits hurt those who are in a situation where they depend on cash. People of all walks of life can find themselves in a precarious situation where cash is the only means of payment available for them to use. Refugees from war areas, for example, are known to carry cash – some times in large amounts – with them as the means of payment that will enable them to access some basic products that they need to survive.
- Consider the effects of inflation: a limit set today will represent an even lower amount a few years from now. ”10 000 EUR” – the amount proposed by the European Commission – may seem like a high amount in 2023. However, be mindful that with inflation, this amount will not have the purchasing power in 2033 that it has today and it certainly will not in 2043. By setting limits that may appear high today, policymakers are effectively restricting tomorrow’s citizens’ freedoms and rights. Setting a limit of 3 000 EUR in 2023, as some in the European Parliament Committees voting next week are considering, is setting a limit that in 2033 will amount to today’s 2500 EUR (at the ECBs annual inflation target of 2%, which is far below the actual inflation rates currently witnessed across the Eurozone). Equally, setting a limit at 1 000 EUR now means that citizens in 2033 would be able to pay in cash only up to the amount equivalent to today’s 825 EUR.
Cash Payment restrictions are not built on actual empirical evidence that they would reduce crime and cause more harm than good.
The legislators need to carefully assess the relevance of the risk scenarios to rectify a restriction of this public instrument, as restrictions to the use of cash reduce choice, freedom and ultimately punish weaker groups of society that rely on an efficient cash system and those that wish to use cash.
We point to our recommendations for policymakers elaborated in our recent White Paper on Cash Policy and urge them to continue to ensure that cash can play a key role as a public good that offers value to all groups of society.