- The the European Court of Justice is backing up cash.
- Cash remains relevant.
- European jurists protect cash and the poor.
Is cash still relevant? What is the future of the euro, and more importantly, what is the future of cash in general? These past few months have been tough for advocates of cash, with unfounded insinuations that cash can be a source for the spread of COVID-19. The Advocate General of the European Court of Justice, Giovanni Pitruzzella, has published a timely advisory opinion on the use of cash within the European monetary system.
The AG’s Advisory Opinion
Following the referral of a case from the German Federal Administrative Court to the European Court of Justice in Luxembourg, the Advocate General Giovanni Pitruzzella released, on September 29th 2020, a non-binding advisory opinion on European Union monetary policy. The opinion focuses on the concept of the euro as legal tender, and touches on the economic disparities of a cashless, digital economy. He wrote: “All this in a complex environment in which the success of scriptural and electronic money and technological progress, with potentially disruptive effects on the use of money, is accompanied by the existence of a significant number of vulnerable people who still do not have access to basic financial services.”
The joined cases referred to the Court of Justice, Johannes Dietrich and Norbert Häring v Hessischer Rundfunk (C-422/19 and C-423/19), concerned the payment of a television and radio licence fee to Hessischer Rundfunk, which the applicants offered to pay in cash, an offer that was swiftly refused by the state broadcasting corporation. Highlighting the European Union’s “exclusive competence in the area of monetary policy,” Pitruzzella argues that EU law creditors have an obligation to accept cash in for the payment of monetary debts. “Historically,” he argues, “the most important form of money has been the physical form of cash (banknotes and coins), the ultimate expression of the monetary sovereignty of the State.”
The opinion highlights wider concerns regarding the development of cashless systems in an ever-changing global economy, and the effects this could have on financial and social inequality. The COVID-19 pandemic has underlined pre-existing social inequalities, and AG’s opinion argues that “recent data show that the number of people who do not yet have access to basic financial services in the European Union and the euro area, while being a minority, is not insignificant.” As technological advancement, the expansion of a vast interconnected global digital network and the dominance of the internet are felt throughout many Western societies, there is always a risk that a minority will be left behind and out of the loop. “For these vulnerable individuals,” he argues, “cash is the only form of accessible money and thus the only means of exercising their fundamental rights linked to the use of money.” In other words, cash remains a fundamental tool for connecting the less privileged with the wider economy.
Cash Remains Relevant
Far-ranging concerns regarding cashless transactions are ever-present in the current discourse, with uneasiness regarding data protection, privacy and personal freedom commonplace. A recent ING survey focusing on cash and cryptocurrencies discovered that 54% of Europeans, 59% of Australians and 65% of Americans disagree with the statement, “I would prefer if cash did not exist”, with only 22% of Europeans and 18% of Americans stating that they would prefer it if cash no longer existed. The survey concludes “that many would like the option of using cash to remain open,” although not as an exclusive payment option. Jessica Exton, ING Behavioural Scientist, argues that “our demand for cash appears relatively stable, despite increased payment options. While some of this will be driven by what’s accepted and what we are used to, it also suggests cash retains an everyday value not met by alternatives.”
The advisory opinion highlights a recent study published by the ECB, that shows how cash accounts for some 79% of Europeans’ daily payments and around 54% of their value in the European Union. In response to the study, the AG underlines how “cash still plays an important role in the euro area economy and thus the advent of a cashless society does not seem as imminent as some people like to think (in Europe, at least).” In spite of the inherent trend towards a digitalised monetary system in Europe, cash remains an essential element of day-to-day transactional behaviour.
Why Cash Still Matters
The AG’s opinion encourages us to not lose sight of the importance of physical cash as an instrument to stimulate social inclusion. There is, it argues, “a direct link between cash and the exercise of fundamental rights does exist in cases where there is a social inclusion element of the use of cash.” A cashless economy would unfairly punish individuals with little financial security. Vinay Prabhakar, vice president of product marketing at Volante Technologies, argues that “what is an advantage for one group is a disadvantage for another.”
A continued push towards a cashless monetary system would further enforce pre-existing inequalities that have already taken a huge hit during the global health crisis. Cash must continue to co-exist alongside cashless payment methods as a tool for economic inclusion across Europe and the globe. The AG’s opinion supports this, stating that “measures restricting the use of cash as a means of payment should therefore take into account the social inclusion element of cash as a means of payment for those vulnerable people and should ensure the effective existence of other lawful means for the settlement of monetary debts.” Cash still matters.