European Commission is committed to the right to use Money in physical form such as banknotes and coins. as Money that is legally valid for the payment of debts and must be accepted for that purpose when offered. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered (“tendered”) in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt.
Austrian Member of European Parliament, Lukas Mandl, submitted the following question to the Commission on 18 April 2019:
“Time and time again there are reports in the media about attempts to do away with cash as legal tender. Should only electronic A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. operations be possible in future, there would be a risk — as a result of high negative interest rates — that large sections of the population would effectively be gradually divested of their assets. In addition, the International Monetary Fund (IMF) is now openly considering annual depreciation of electronic From the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati..., by a specific percentage, by levying negative penalty interest (See Banknote paper. dated 27.8.2018: ‘Monetary Policy with Negative Interest Rates: Decoupling Cash from Electronic Money’).
Is the Commission totally committed to the right to use cash as legal tender?
Would the IMF’s idea for annual depreciation of electronic money by levying negative penalty interest contravene EC law?
Is the Commission considering taking firm and high-profile action to Automatic device for the counting of banknotes or coins. the IMF’s notions about depreciation of electronic money through negative penalty interest rates?”
Valdis Dombrovskis, Vice-President of the European Commission in charge of Financial Services gave his response on 20 June:
The Commission acknowledges the fact that cash remains the most popular Device, tool, procedure or system used to make a transaction or settle a debt. in the EU and confirms that it remains committed to the right to use cash as legal tender.
The ideas put forward in one of the many research papers of the International Monetary Fund are designed to elicit comments and to encourage debate. The question as to whether the ideas that they contain could contravene EC law is purely hypothetical.
According to the European Commission’s website, “within the The name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. area, only the euro has the status of legal tender. Article 128 (1) TFEU lays down the legal tender status of euro banknotes, and article 11 of Regulation EC/974/98 does so with regard to euro coins. This means that in the absence of an agreement of the means of payment, the creditor is obliged to accept a payment made in euro which subsequently discharges the debtor from his payment obligation“.
However, the interpretation of legal tender differs from country to country and raises questions such as:
In 2010, the Commission adopted a recommendation – non-binding – which provides guideleines on the actual implications of legal tender. The guidelines are articulated around 10 principles: