The PSOE’s proposal, known this Saturday, to gradually eliminate cash in Spain has turned out to be contrary to the criteria of the European Commission and the European Central Bank (ECB). The Socialist Parliamentary Group has registered in the Congress of Deputies a non-law proposal requesting “the gradual elimination of cash payment, with the horizon of its definitive disappearance”, and that it is pending to find a date for its debate. However, this initiative, carried out by EL PAÍS, violates the principles of the Treaty on the European Union, which establishes that euro banknotes and coins are legal tender, which would make it impossible for the Government to take this measure.
The European Commission already clarified this position in 2010, when it determined that “the norm should be the acceptance of euro banknotes and coins as a means of payment in retail transactions.” And he continues: “A denial of this form of payment should only be possible if it is based on reasons related to the principle of good faith, such as that the retailer does not have any changes available,” says the Commission.
On the other hand, the Ministry of Finance admitted that a legal reform is being considered, perhaps for this year, which will reduce cash payments between individuals from 2,500 to 1,000 euros, as the socialist government already tried in 2019, without success. The measure is framed in a series of proposals that seek to end the shadow economy and increase tax collection in the face of the needs that the pandemic has imposed. Regarding this proposal, the ECB, the monetary authority, has a contrary position, since it considers that it is “disproportionate” because it understands that excessively limiting the use of banknotes or favoring their disappearance would harm the most vulnerable social groups, such as the elderly, immigrants and inhabitants of rural areas.
The risk of the legal tender
The ECB’s position, which is not binding, was manifested in February 2019, but is still valid today, as this newspaper has learned. At the request of the Bank of Spain, the Central Bank stated that it considers the reduction of the cash payment limit to 1,000 euros “disproportionate, in light of the potentially adverse impact it would have on the cash payment system. In fact, this limit makes it difficult to settle legitimate transactions and jeopardizes the concept of legal tender currency enshrined in the Treaty. ”
In a letter signed by Mario Draghi himself, former ECB president, he warns that ending cash could be a problem when there are failures in “the underlying technical infrastructures used by payment service providers”, that is, problems with electricity supply or Internet network.
It also reminds the Government that “cash is appreciated as a payment instrument because it is accepted by everyone, quickly and makes it easier to control the payer’s spending. Furthermore, it is the only means of payment that allows citizens liquid and instant transactions without having to pay fees for the use of this means of payment. ” In this way, it hints that the use of cards by citizens would allow banks to establish commissions that are impossible to avoid if the use of electronic transactions is made compulsory.
In 2019, the Government also considered limiting cash payments made by individuals who are not tax residents in Spain to 10,000 euros. The ECB said that this measure was not justified and that the sanction established in the draft law, 25% of the amount paid, “seems disproportionately high.”
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