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Cash: Ensuring a Fair, Inclusive and Secure Digital Transition

Categories : Cash connects people, Cash facilitates budgetary control, Cash generates security, Cash has legal tender status, Cash is the first step of financial inclusion
May 21, 2024
Tags : Financial inclusion, payments security, Spain
Cash is essential in a well-functioning society, as it guarantees social cohesion, which is threatened by aggressive digitalisation, says Spanish pro-cash platform Denaria.
Concha Jimenez

Former Head of the Cash and Branches, Banco de España

Member of the CashEssentials Steering Committee

This post is also available in: Spanish

DENARIA Platform organized a conference in Madrid on April 24th, with the collaboration of the Spanish Federation of Municipalities and Provinces (FEMP), to reflect on financial exclusion, which affects a large part of the population.

The conference emphasized the role of cash in society’s functioning, as it guarantees social cohesion threatened by aggressive digitalization. The physical euro is legal tender, and its access, as an essential payment service, is a legally recognized right that ensures all social groups’ financial inclusion.

Concerns about fraud and privacy, the maintenance of a distribution infrastructure for cash, environmental impacts, and other risks are at the heart of the debate because they affect individual rights, national security, and the very model of democratic society. It is essential to analyze the social consequences of discrimination against a means of payment such as cash, as well as the effects of the digital transition in terms of privacy and the impact on the environment.

Luis Martínez-Sicluna, Secretary General of the FEMP, stressed that Local Governments are on the front line of responding to citizens’ problems and are key players. Public Administrations must guarantee access to cash because it preserves the right of citizens to choose the means of payment, stressing the need to act in this regard and, in particular, to face the demographic challenge.

Rural areas experience the most widespread use of cash. However, the absence of ATMs and banking services to access cash and the limitations of the population, often aged, to make digital payments make the residents vulnerable. Public-private collaboration is necessary to solve this problem in many municipalities. The lack of access to cash is closely linked to financial exclusion, and municipalities and provinces are at the forefront of the issues in this area.

The President of the DENARIA Platform, Javier Rupérez, referred to cash as the most democratic monetary instrument, a right of citizens that always works. He stressed that cash continues to be the primary payment method for many consumers in Spain, and almost 70% of citizens consider it very important in their day-to-day lives. Rupérez pointed out that despite the substantial reduction in the number of ATMs in Spain, nearly 2.000 each year in recent years, the value of money withdrawn has grown considerably, almost reaching pre-pandemic values in 2023, forecasting that withdrawals will reach an all-time high his year, beating the record set in 2019. Citizens are forced to increase the average amount of withdrawals: the 2023 average of €180  is almost 31% higher than the 2019 average.

Rupérez warned about the European Commission’s discrimination against physical money compared to digital money.

“The current legislative proposal of the European Commission legitimizes a system with two forms of public money (physical and digital) with regulations that are not at all homogeneous, when there should be a neutrality in the conditions of acceptance and access of both means of payment, as the central banks themselves have stated on different occasions.”

Ruperez also highlighted the concept of cash as a strategic reserve.

“Denaria’s intention is to consider cash as an essential asset within the framework of national security in the face of the risks and threats derived from an interruption in the access, availability, and usability of money.”

At the same time, he recalled the obligation for merchants to accept cash payments, as set out in the Consumers and Users Law in force since May 2022. In mid-2023, Denaria opened a whistleblowing channel to citizens on its website. The president of the platform highlighted the anomaly of the prohibition of the payment of rent in cash, included in the Right to Housing Law, “a decision that harms the most vulnerable groups of people to a greater extent.” One of the association’s objectives is to increase the limit on cash payments, which currently stands at €1,000, while in other countries, it is between 3,000 euros and 10,000 euros.

Significantly, the European Central Bank itself considered in 2022 disproportionate the reduction in the limit on cash payments approved at the time by the government. Rupérez warned of the disproportion between the limit of cash payments set at €1,000 by the Government of Spain and the €10,000 cap in the European Commission’s proposal. He criticized the obsession with associating cash with fraud because technology has complicated the traceability of illegal financial flows. He pointed out that the Spanish Ministry of Finance’s union found that the wealthiest individuals, multinationals, and larger companies account for around 75% of the total fraud. In comparison, the self-employed and individuals account for only 11% of this tax gap.

Throughout the conference, it was emphasized that cash is the preferred payment method for many citizens for several reasons, including the security it provides, the guarantee of privacy, and the ease of controlling spending.

The Cash Situation in Spain: Need for Effective Action and Best Practices

Due to the concentration of banks and the closure of bank branches, the Badajoz Provincial Council opted for a public-private model that installed state-of-the-art ATMs in 35 municipalities with a total of 15,000 inhabitants. The result has been a success, with more than 350,000 operations and €40 million in movements. This scalable model can be replicated in new neighborhoods in cities that do not yet have bank branches.

The Provincial Council of Palencia believes in the commitment that people living in rural areas have the right to be served under the same conditions as in the cities. For this reason, it launched a pilot program in 66 municipalities. This program consists of a mobile office with a financial professional to maintain the personal client-entity relationship. It serves 30,000 people each month, representing 50% of the rural population.

The President of the Provincial Council of Almeria emphasized the freedom, autonomy, and privacy offered by cash. As for the measures taken by the Provincial Council of Almeria to ensure their access, when 33 municipalities in Almeria lacked access to financial services, a project was launched to install ATMs throughout the territory, involving 300,000 transactions with a value of €50 million. The number of withdrawals increased by 30%, which corroborates its success. Today, the province of Almeria has no financial exclusion, and all its citizens have access to cash.

Digital Payments and Privacy

The Director General of the Spanish Data Protection Agency highlighted the accessibility, universality, and capacity for reflection when paying cash and recalled that more than 23% of Spanish citizens do not have a bank account. In contrast, the risks associated with digital payments include cybersecurity problems, data protection, and consequences on cognitive development, compulsivity, and mental health, especially for children and young people.

The President of FNMT-RCM stressed that cash is a payment system used by 90% of the world’s citizens and is universal, sustainable, and inclusive. Also, remember that although digital payments are here to stay, the associated privacy and data protection risks must be reflected. It is not a question of ceasing to use one payment method or another but of ensuring that citizens’ data is not used without authorization.

Different Payment Methods and their Effect on the Environment

Antonio Arrieta, Senior Lead Banknote R&D Expert at the ECB, reported that the environmental footprint of banknotes is the equivalent of driving a standard car 8 km.  The ECB’s priority is to keep cash healthy and sustainable. It is working to understand the end-to-end environmental impact of banknotes as a payment instrument to identify further aspects of the lifecycle that can be targeted to reduce the ecological effects of banknotes. No comparable measure is available regarding digital payments using the European Commission’s Product Environmental Footprint methodology, which covers 16 environmental categories and not only the CO2 impact.

Manuel Giménez Rasero, the Executive Director of the Spanish Association of Data Centres, said that data centers are the backbone of digital and cash payments. It defends freedom of choice and plurality of options. It argues that a more sustainable generation of payment methods requires traceability and transparency of the relationship between data centers and the public sector.


The Spanish Ministry of Consumer Affairs Chief Consumer Officer, Daniel Arribas, argued that cash is crucial for a fair, inclusive, and secure digital transition. He is firmly committed to recognizing the right to use cash, which will be included in 2022 in the Spanish legislation on consumers and users. He also values Denaria’s whistleblowing channel very positively and considers making progress in this area necessary so that cash is not underestimated.

The conference closed with a clear conclusion: public administrations must contribute further to preserve access to cash and disseminate the existence of public-private collaboration actions that are carried out in this area. The promotion of public administrations should be a priority for future actions to address demographic challenges in municipalities with smaller populations, where there are more people with difficulties in using other means of payment, higher age rates, and lower digital skills.

This post is also available in: Spanish