Legal tender

A case before the top European Court could have important implications for the status of banknotes and coins as legal tender and the acceptance of cash. In this second part, we analyse the link between legal tender and the exercise of fundamental rights. We also look at the implications of legal tender for a central bank digital currency (CBDC).

A case before the top European Court could have important implications for the status of banknotes and coins as legal tender and the acceptance of cash. The Advocate General issued a preliminary advisory opinion which states that creditors have an obligation in principle to accept cash in euros for the payment of monetary debts.

Riksbank governor calls for stronger legal protection for cash. The Central Bank recommends to review the concept of legal tender. “If it were to be established by law that one was forced to accept cash in Sweden, more of us would probably choose to have cash in our wallets.” says Ingves.

On 24 September 2020, the Commission adopted a retail payments strategy for the EU that aims to further develop the European payments market so Europe can fully reap the benefits of innovation and opportunities that come with digitalisation. Maintaining the availability of central bank money is a core element of the strategy.

A case currently being heard in Europe’s top court could have a major bearing on the future of banknotes in the region. The case asks the court to define the term ‘legal tender’. The judgement will be delivered in the Autumn.

A survey shows that the majority of Spaniards view access to cash as important in times of crisis. Meanwhile the government is proposing to lower the limit on cash payments and advocate its elimination altogether.

The Banque de France as well as the National Ombudsman have reminded merchants that refusing cash for a payment is illegal in France. In the UK, various associations increasingly speak out for cash.

The European Central Bank has delivered a legal opinion supporting the draft law proposed by the Swedish government, which aims at guaranteeing that the largest banks provide a minimum level of cash services throughout the country.

Efforts to ban cashless retail are gaining momentum across the US. After Philadelphia, New Jersey, San Francisco, Massachusetts, and other cities and states have taken action to guarantee the acceptance of cash. In total there are 11 bills currently approved or making their way through the legislative process.

The Dutch government is putting forward a package of measures to Parliament, aimed at fighting against money laundering. Two of these measures specifically target cash: banning cash payments above and scrapping the €500 note.

The European Commission proposes to introduce EU-wide restrictions on cash payments.

While digital payments can be encouraged, they should not aim to make cash redundant. There is huge merit in having cash as a viable option for payments.