Laws to Protect Cash Gain Momentum

The European Commission, the European Union’s executive arm, has published a proposal on the legal tender status of euro banknotes and coins. The proposal is part of the Single Currency legislative package which also includes a legal text on a digital euro.

The International Currency Association (ICA), representing the global currency sector, was quick to applaud the proposed legislation to mandate the acceptance of cash, ‘Ensure that Retailers Accept Cash’ having been the first of recommendations to governments in its recent White Paper on Cash Policy (see CN March 2023).

ICA Chair Gianni Santoro commented: ‘to make sure that everyone has the right to use cash, you need to make sure that cash is accepted everywhere. Legislators around the world have recognised this. We are pleased that the European Commission is now also taking this important step.’ 

The main part of the proposed legislation relates to the possible introduction of a digital euro that is widely usable and available throughout the euro area in the same way the banknotes and coins are now, and has been enthusiastically received by the European Central Bank (ECB).

‘The legislative proposal is key to ensuring that the digital euro brings value to the people, taking the appreciated features of cash into the digital sphere’, said ECB Executive Board member Fabio Panetta, who chairs the High-Level Task Force on a digital euro. ‘The ECB also welcomes the Commission’s proposal on the legal tender status of euro cash, to ensure banknotes remain easily accessible for citizens and businesses and widely accepted throughout the euro area.’ 

The cash proposal places the responsibility for defining the acceptance of cash on the member states, in line with EC Recommendation 2010/191/EU and the 2021 European Court of Justice ruling in the case of Johannes Dietrich and Norbert Häring v Hessicher Rundfunk, although with direct legislation a future possibility.

The proposal states that it will ensure that everyone in the euro area is free to choose their preferred payment method and has access to basic cash services, and the financial inclusion of vulnerable groups who tend to rely more on cash payments, such as older people.

Member states will be required to ensure widespread acceptance of cash payments, as well as sufficient and effective access to cash. They will need to monitor and report on the situation and take measures to address any problems identified. The Commission could step in to specify measures if needed.

The full name of the legislative proposal is ‘Proposal for a Regulation of the European Parliament and of the Council on the Legal Tender of Euro Banknotes and Coins’. It will now be debated in the European Parliament and in the Council of the European Union before its final adoption.

Renewed efforts for US legislation

Across the ocean in the US, meanwhile, Congress members have reintroduced bipartisan legislation in the House of Representatives and the Senate to ban businesses from rejecting cash for in-person retail purchases.

The Payment Choice Act revives prior proposals for 2019 and 2021, which also won bipartisan support and passed the House, but failed to get further. This latest bill has more sponsors now than its predecessors.

The bills (two of them – one for the House and one for the Senate) are designed to protect Americans who are unbanked and underbanked and who rely on cash to pay for necessities, as well as to preserve the right of consumers to choose to pay with cash, say the authors.

Cash still accounts for nearly 20% of all payments in the US, and an estimated 5.9 million US households, or about 4.5%, were unbanked in 2021.

The text of the Senate bill lays out requirements for businesses to accept bills up to $20 and to prohibit charges for cash payments. It also provides for no-fee options to convert cash to a payment card and proposes penalties of up to $1,500 for each violation.

The congressional legislative proposal joins a growing body of state and municipal laws protecting cash payments in Colorado, New Jersey, New York City, Philadelphia, San Francisco and Washington, DC.

UK bill receives Royal Assent

As Currency News™ went to press, it was announced that the UK’s Financial Services and Markets Act 2023 has now received Royal Assent, which effectively means it now becomes law.

Described by the UK government as a landmark that is central to growing the economy and creating an open, sustainable, and technologically advanced financial services sector, the Act is mostly concerned with post-Brexit financial regulation.

But it also includes a provision to protect free access to cash. The provision was a late amendment following pressure from the consumer group Which? and others. It is designed to ensure that people across the country can withdraw and deposit cash for free, giving the Financial Conduct Authority (FCA) greater powers over major banks and building societies to ensure reasonable free access to cash is preserved for those who need it.