The no-cash economy was one of the hottest topics at the World Economic Forum in Davos. Consequently, the European Commission pressed on with its EU cash caps proposal. The supporters argued that removing cash from the economy would benefit everybody. The main advantages cited:
- battling the shadow economy
- fighting tax evasion
- preventing funding of terrorist groups
- eliminating run for cash in times of economic downturns
The pros of a cashless economy are convincing.
As well as getting rid of criminal transactions it will help tackle economic instability. As a result, we will have a safer and wealthier society.
Indeed, many European nations already have cash caps in place. For example, Spain and France both introduced €1,000 maximum on cash payments. Greece went much further, dropping its cap for cash transactions from €1,500 to €500.
However, are we ready to say goodbye to cash?
Yet, not everyone supports the idea. There are doubts among experts and the general public that a cashless economy is a right way to go.
Many look at Greece as a test pilot. When the country was disconnected from the delivery of cash, the outcome was dire. As a result, the nation saw empty cash machines and endless queues. People were unable to pay. Businesses were refusing to accept noncash payments. There was a lack of basic services. Everyone including tourists were affected.
Next, when Germany tried to set a cash cap of €5,000, it met with huge public protests. Similarly their neighbour Austria was also deeply unhappy about the move. Austria’s Deputy Economy Minister likened cash removal to the removal of privacy.
The Commission admits the controversy of the proposal. In the first place, cash is the most accessible means of payment. Secondly, it is the most popular way of payment. But above all many people consider cash a personal freedom. Removing cash from economy can have unwanted side effects.
“The objective naturally deserves our support, but a ban on cash payments would limit personal freedoms and subject Europeans to the arbitrariness of the European Central Bank (ECB), nation states and the commission.”
Tuomas Malinen, a post-doctoral researcher at the University of Helsinki.
Yet the Commission is going ahead with its cash caps plan.
The European Commission is pressing on regardless.
It recently published an assessment on the cash caps proposal. The document describes the effect of introducing an upper limit to cash payments across the EU.
The cash caps proposal aims to step up the fight against the financing of organised crime and terrorism. The authorities also want to harmonise the legislation across all member-states. It will help prevent the cash transactions moving across the border to elude cash restrictions.
Read the full story in the Helsinki Times