“Cash is legal tender”, the ECB warns Spain
The European Central Bank has spoken up against the Spanish Socialist Workers’ Party’s (PSOE) proposal to gradually phase out cash in Spain. The proposal, which is due to be debated, stands to violate the principles of the Treaty on the European Union which states euro banknotes and coins are legal tenders, the ECB confirmed on 13th June 2020.
Declaring their stance on cash in Europe in 2019, the ECB outlined that it is every European citizen’s legal right to use cash as a tender and that cash remains a popular payment option despite the uptake of cashless transactions.
“The Commission acknowledges the fact that cash remains the most popular payment instrument in the EU and confirms that it remains committed to the right to use cash as legal tender.”
The proposal from the PSOE comes as a surprise following the Bank of Spain’s annual report which shared “53% of Spaniards consider cash as their preferred method of payment.” Furthermore, citing reducing tax evasion as a contributing factor in their pro-cashless proposal contradicts findings from the Keeping Cash: Accessing the Arguments about Cash and Crime study, according to which cash is not to blame for the shadow economy.
"Given that tax evasion also makes use of multiple tools and methods (most notably the setting up of shell companies and the use of tax havens to park undeclared wealth and assets), the claims that cash alone should be targeted are weak."
Despite not being addressed in the PSOE’s proposal, the final call for cash from the ECB’s counterargument branded the move as “disproportionate” due to the impact on the “most vulnerable social groups, such as the elderly, immigrants and inhabitants of rural areas.” Read more
When considering the popularity of cash in Spain, it can only be speculated as to what would be the benefit to the government and its people by making its population dependent on non-European commercial financial organisations?