“Granting of legal tender status to euro banknotes under the TFEU [Treaty on the Functioning of the European Union], and thus at constitutional level, does concern fundamental rights and fulfils at the same time an important institutional function. Euro banknotes do not exist “for their own sake” or to allow us central banks to obtain seigniorage, but for reasons that are protected under constitutional law.”
– Yves Mersch, ECB Executive Board Member
During his speech at the 4th Bargeldsymposium of the Deutsche Bundesbank, ECB Executive Board Member Yves Mersch spoke loud and clear in favour cash and the ECB’s legal responsibility to protect the euro as legal tender.
Giving examples of how, since 2016, the ECB is increasingly being consulted by member states exploring cash limitation measures, Mersch stresses the point that, should there ever come a day when cash is discriminated against, the ECB would promptly intervene. Why would it intervene? Because the central bank is the guardian of the eurozone’s legal tender and, following the definition of legal tender, the euro must be accepted by all at face value (unlike alternative payment methods which are allowed to integrate a fee).
Mersch explains that legal tender doesn’t necessarily have to be tangible, “if there is a public demand for digital central bank money,” he argues, “this should only be a technical variant to cash”. “Alternative payment methods,” he adds, “cannot replace euro cash; they can only complement it”.
Indeed, the ECB is keeping the pace with new developments and is already riding the blockchain wave, known as TIPS, which will be launched in November this year. TIPS is designed to allow real-time transactions through ledger technology, a system described by Mersch as much better than those behind cryptocurrencies already on the market.
And finally, Mersch confirms the ECB’s responsibility to offer all of its citizens, regardless of age, education, gender, health, or race a viable, accessible and easy-to-use payment tool. Today, the only one to fulfil that role today is cash.
“I will conclude by saying that printed euro banknotes will retain their place and their role in society as legal tender for a very long time to come. There is no viable alternative to euro cash.”