The EU Backs Off its War on Cash. Here’s Why

People view paying in cash “as a fundamental freedom, which should not be disproportionately restricted.”

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

The European Commission, in its official war on cash, admitted that physical cash is perhaps not quite the source of all evil that many EU institutions, including the Commission itself, had made it out to be. And it has abandoned its war on cash.

In a report to the European Parliament and Council on the viability of EU-wide cash payment restrictions, the Commission made three crucial observations.

1. Cash restrictions would have little effect on terrorist financing

Cash plays a major role in many terrorist activities, “offering anonymity and facilitating the ability to conceal not only illegal activities, but also ancillary legal transactions that could otherwise be tracked by law enforcement agencies,” the report points out. But according to the findings of a detailed analysis of recent terrorist attacks, restrictions on payments in cash would have had little impact on the capacity to prepare these attacks, especially given the “observed trend of the decreasing costs of terrorist attacks.”

The amounts of individual transactions are often even lower, and would therefore not have been impacted by restrictions. What’s more, many common transactions made in the preparation of recent terrorist attacks were done using traceable means (credit and debit cards, bank transfers, etc.) without raising any red flags.

2. Cash restrictions could be useful in combating money laundering but are of limited help against tax fraud.

The report notes that cash limits could be a useful tool in the fight against money laundering, of which cash transactions are normally the starting point. Despite the steady growth in non-cash payment methods and the changing face of criminality (i.e., the rise in cybercrime, online fraud and illicit online market places), criminal activities continue to generate profits in the form of large amounts of cash.

The fact that EU Member States have vastly different rules on cash limitations makes it easier for criminals to launder the proceeds of their operations as it allows them “to circumvent controls in their country of origin by investing in cash intensive businesses in another EU Member State with no or a lower control of cash expenditures.”

The differences in national cash restrictions also hamper the proper functioning of the internal market, leading to a displacement of turnover from countries with strict cash restrictions to those without, the study concludes.

On the flip side, there’s little evidence that EU-wide cash restrictions would help authorities in combating tax fraud:

While there is some correlation between the use of cash in an economy and the level of tax fraud, it seems that other factors also play an important role, which would explain the existence of outliers (such as Austria which has a low level of tax fraud but a high usage of cash).

Most forms of tax fraud deploy the non-cash system, helped along by multinational banks, accountancy and law firms firms, and the offshore shell corporations they help companies and individuals set up:

A significant form of tax fraud is conducted through non-cash transactions, with the fraud relying on complex legal structures and operations which are often of a multinational nature and which do not involve any use of cash. In these cases, a prohibition on payments in cash would be totally ineffective.

3. There is no appetite among the European public for EU-wide cash limits.

A public consultation by the Commission last year revealed that most Europeans do not want EU-wide limitations on cash payments. As the study points out, the main take away from the survey was that “a substantial majority (95%) answered negatively to the question, ‘Would you agree to the introduction of restrictions on payments in cash at EU level?’ This was a shared view between respondents, regardless of whether restrictions were in place or not in their own country of residence.”

Even more emphatic was the answer to the following question in the survey: “How would the introduction of restrictions on payments in cash at EU level benefit you, or your business or your organisation (multiple replies are possible)?”

In the curious absence of an explicit “not at all” option, 99% chose to respond with “no answer.” In other words, less than 1% of the more than 30,000 people consulted could think of a single benefit of the EU unleashing cross-regional cash limits.

In light of the survey’s results, the Commission acknowledges that “restrictions on cash payments is a sensitive issue for European citizens”, many of whom “view the possibility to pay in cash as a fundamental freedom, which should not be disproportionately restricted.”

“No Legislative Initiative Needed (At This Stage)”

In its final conclusions the Commission states it is not considering “any legislative initiative” on EU-wide cash restrictions “at this stage”, which should be cause for relief for EU-based cash lovers. Nonetheless, the Commission’s report is peppered with caveats, including this ominous statement at the end: “Considering the internal market aspects and the significance and sensitivity of such a potential measure, this matter requires further assessment.”

But its war on cash is not over. In May, EU Member States and the EU parliament ratified the Commission’s proposals to tighten cash controls on people entering or leaving the EU. These measures will enable authorities to impound “cash” below the traditional €10,000 threshold, “if criminal activity is suspected.” It also broadens the definition of cash to include precious stones, precious metals, and prepaid credit cards. As such, while the European Commission may have pressed the pause button on its war against cash within the EU, it appears to have expanded it at its borders. By Don Quijones.

The electronic-payments industry, which gets a cut from every electronic transaction, wants to kill cash. But wait… Backlash Against “War on Cash” Reaches Washington & China

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  47 comments for “The EU Backs Off its War on Cash. Here’s Why

  1. Pete Stubben says:

    I dunno — who pays with cash these days…nobody! Electronic dollars & plastic dollars are still dollars (guaranteed by the good faith, no, of the US Government) and are just another medium of exchange, and if we got sleezbags substanially under-reporting their incomes (& I’m not speaking to people like restaurant wait-staff, who make a meaningless difference) to pay less tax…then I gotta pay more tax! I don’t understand this fundamental right to filthy bills & this right to a major inconvenience…ever board an urban city bus and be required to pay with exact change…come on!!!

    Best… PJS

    • Kent says:

      I use a credit card for transactions over $100. Under that it is pretty much cash. A couple of reasons:

      1. Paying with cash always makes me keep in mind whether I really need whatever I’m buying.

      2. Nobody needs to know what I spend my money on but me.

      • Diane Denizen says:

        I think you hit the nail on the head; what you spend your money on is your business, as long as it is not unlawful. It is no business of the State at all.

    • sierra7 says:

      One heck of a statement…”…who pays cash anymore!” I do. Remember when “30 days payable” was/is still is supposed to be “cash”?
      There’s gonna be a “hue and cry” if “cash” is outlawed. Spawn a YUUGE black market!!

      • alex in san jose AKA digital Detroit says:

        Absolutely. US “junk” silver dimes, as-hoc currencies (fine as long as you’re not a dumbass and call them “dollars”) even cigarettes like in WWII. Anything. As a busker I’m fine with gift cards which are a huge thing these days too.

    • Finster says:

      There’s a big difference between actually using cash and having the option the use cash. I bet a lot of people who don’t use it much still like the idea they could.

      That said, in answer to your question, I use cash quite a bit. At the grocery store for example, I use it almost exclusively. This saves my local grocer transaction fees, and in my small town having a viable grocery store is a valuable convenience.

    • Cashboy says:

      I pay as much as I can with cash. I even go into the trouble of drawing out cash from ATMs and then going to banks and paying credit cards and bills with cash.
      I have noticed it is becoming more difficult to pay bills in banks with cash in the UK. They try to force you to bank the cash in your bank account and then pay the transaction electronically.
      It is very easy to launder money. The City of London is the centre of the world for laundering money where one can form an English company in 24 hours, open a company bank account in 3 days, make a transaction, close the bank account and the company.
      I also can see that Take Away/Home Delivery Meal businesses in the UK are used for laundering money and delivering drugs in the UK especially the Pakistani drug (usually heroin) dealers as well as the Mini Cabs.

    • Realist says:

      If I run into a shop where they do not accept my cash, then I say “If you don’t need my cash, then I don’t need your goods” and do walk out leaving the stuff behind at the counter. By sheer principle I avoid using plastic as much as possible.

    • Sofa King says:

      Sorry, Bro…I love paying with cash. Why should some credit company get a Vig on my shit. In terms of the restaurant wait-staff making a meaningless difference, well people do have a problem with visualizing large numbers which is why all the nay-Sayers said that digital music downloads at 99 cents a pop would not amount to any meaningful profits. I should know, I was one of them. If I’m paying and you’re paying, then everyone should be paying, no matter how small the amount is imagined to be.

      On that note, Digital Payment systems should be outlawed so that people can take back control of their money. Plain and simple.

      Oh and my bill are clean, I wash and disinfect that shit before I prepare my roll. You know cash is cloth, right? Always remember, that nothing is more impressive than pulling out that wad wrapped in the extra thick Broccoli rubber band and tipping the Valet.

      • alex in san jose AKA digital Detroit says:

        Digital downloads are a pet peeve with me. Let’s say I like the music of Louis Armstrong. I can buy a CD of 25 of his greatest hits at Fry’s for $5.

        Or, I can spend 99c each from iTunes. But, the more popular ones are $2.99, OK, I guess, they *are* good.

        Then my computer glitches and they’re all gone. There went $25 or more but that’s OK, basking in the glow of a shiny new computer I “restore” them, spending another $25..

        Then my computer is stolen … it happens at a hiring fair and I’ve got a new job so, well, being philosophical I chalk it up to the cost of doing business and to keep me company I restore my 25 Satchmo hits again. I sure don’t want to be without my “All That Meat And No Potatoes” – the one that’s played at the end of the movie Office Space, on Friday afternoon.

        So … so far I’ve spent $75 and counting. Counting because it’s not a matter of if I’ll lose them again but when, and this is before iTunes decides they’ll “age out” after 5 years or the price goes up or both.

        Profitable, indeed!

    • Ricardo says:

      Well I am assuming you live in the USA ….and no its not the only country in the world, at last count there were more than 200 countries on this planet. Cash is still king where I live… and its not the US of A…. everybody uses it and it works just fine. There of course is a difference between dirty (worn) money and crisp new notes and the new notes fold better and stay tidier in your wallet or back pocket. Its always a pleasure to have a wallet when its full of notes. A wallet full of plastic just isn’t the same.

    • SUE JONES UK says:

      I do, so that is somebody.

    • James terrence says:

      It takes longer for someone to pay with credit card / debit card at starbucks when the machines don’t work, when stupid people cant remember pins, when they cant find their card in their handbag.
      Her is my £5 they count your change, and bingo quick transaction,


    • Carey says:

      It would be very easy to ‘unperson’ someone if cash were
      banned. “There seems to be a glitch (heh!) with your
      account… we should have this straightened out in oh,
      a week or two.”

      But those who rule us would never do such a thing, right?


    • MaryR says:

      Huge numbers of people in the U.S. pay cash for variable expenses (groceries, restaurants, gas, and most under $100 purchases in general). Well known personal finance gurus like Dave Ramsey recommend this strategy for family spending and budget control.

      Why do we stick with cash? Cash payment is a very effective way to avoid ever-expanding credit card debt. If you pay cash, you are not borrowing from your future income for current expenses.

      Also, most people want to hold onto the green stuff in their wallets as long as possible compared to easy-use plastic, whether debit or credit cards. I hate to spend my cash. It is the best way to control total spending on the “small stuff” as you cannot spend cash you do not have.

      Also, if millions of people do this, millions or even billions in bank transaction fees are vaporized…and more money is liberated for savings and investment.

  2. Trey says:

    Just a word of advice to the those wanting to ban physical cash:

    This is how black markets are born.

    • Ambrose Bierce says:

      In the US no one has really done a study of the underground economy, it’s just a given that in recessionary times the incidence increases. While the service sector is the fastest growing it is also a place where cash for a discount really applies. So I continue to say there is a lot more economic activity than the experts believe and that a recession is going to be a lot more painful than they imagine when the economy they don’t see in their data slows down.

      • Trey says:


        The dirty secret of the service economy is that if you want (or need) better service, pay in cash.

  3. Petunia says:

    As long as some govt somewhere is printing currency they are fighting a losing battle. They are only driving money offshore. The EU is in enough trouble with the voters, this is just another nail in the coffin for them.

  4. robt says:

    ” … not considering “any legislative initiative” on EU-wide cash restrictions “at this stage”, ‘at this stage’ being the standard disclaimer meant to disarm protest until introduction next year or maybe next month.
    The ‘cashless’ plan is a setup for tax-on-transactions, the dream of states, to be initiated at some miniscule rate so everyone says ‘It’s almost nothing”. Once in place it proceeds by increment, always for some purpose defined as good or necessary, such as an EU army or the necessary increase of the bureaucracy to administer the plan.

    Part 2, the whole business of civil forfeiture, now rampant in the US and Canada, with many horror stories as testament to the inevitable abuse, is just the ancient and traditional highway robbery dressed up in a new name, with the recent innovation of the requirement to prove a negative to get your money back by becoming a supplicant opposed by government lawyers with unlimited resources in an overloaded court system until you give up in exhaustion or go bankrupt trying.

  5. George McDuffee says:

    A most cogent presentation of the facts.

    Most unfortunately the EU socioeconomic/cultural ideological melange requires the abolition of all forms of cash above the smallest denomination bills and coins, and it has nothing to do with “fighting” terrorism or “money laundering” but rather with universal surveillance and increasing tax extraction. Individual “guided” purchasing [rationing] and continual monitoring. e. g. debt levels, are the next logical steps.

  6. cdr says:

    Good sign that the end of NIRP in the EU is coming someday. Otherwise, they would have doubled down to get all the cash so negative rates could flourish.

    But, there’s a little problem implied within. Rate normalization in the EU is easier said and promised than implemented. The socialist utopia of the EU is a place of rising costs and they will need new revenue sources once the ECB printing press stops (my standing bet: this will never happen – it will just be called something else under pain of employment loss if anyone argues about it).

    Draghi is dreaming about an operation twist like manipulation after “QE ends in December” (ha ha). The little problem there is who will buy new EU issues or secondary market debt at negative rates if normalizing rates are available in the good old USA? As I said many times, NIRP only works if everyone does it.

    Thus, will QE openly resume or will draconian capital controls be implemented – all to avoid having to pay real world rates on the endless need for deficit financing to support the socialist utopia in the EU? Perhaps they think they can become other worldly like Japan and the BOJ?

    End game in sight.

    • Ambrose Bierce says:

      The US may normalize but it could become an issue of supply. It cuts two ways, the competition for US bonds drives down the yield, and so in order to keep up the pace toward normal rates, they might cut back on supply which means smaller government. They myth of the fiscal spending package (a Clinton policy as well) may run into House Tea Party advocates after a post midterm swing to the other side. Normally government wants to expand spending during a recession, but if no recession shows up, they might feel the more expedient thing to do is what for Republicans is the norm, balance the budget. That would take the pressure off the EU that the US normalization has caused, and would allow them to taper, or twist, or whatever abnormal policy they prefer.

      • cdr says:

        Nobody plans that obscurely or in such detail. Only financial bloggers think like that and usually just to sell whatever they’re selling … trolling for customers. Not you. I think you’re the audience they write for.

        Life isn’t that complicated.

        The US will issue debt forever. It will attract a flight to yield from the NIRP/ZIRP places. Chinese mandarins will use it to launder gains when possible. Investors, or whatever the correct name is today, will use it for a flight to safety always.

        Moral – if it’s too complicated it’s not true. Most scams are simple. The lies are convincing, making one thing gravity really can be defied at will without an airplane, if you do it right. QE is a good example.

      • Unamused says:

        ->they might feel the more expedient thing to do is what for Republicans is the norm, balance the budget.

        Republicans normally only want to ‘balance the budget’ when Democrats win the presidency. Otherwise they normally go in for record deficits. Next year’s deficit will be over a trillion.

        • Ambrose Biercec says:

          This is the moment when you dance with who brung ya’. The break between the Koch brothers and Trump is a litmus test, they might even get some dissident Dems to join them like the bipolar coalition in Italy. There are many ways to impeach or censure a president, one is to walk away from a relationship where you are compromising yourself. Republicans like being outsiders, it suits their style.

  7. Alex says:

    Legalize drugs then laundering problem is reduced to almost ZERO! But bankers make big fees off laundering global drug money so they will fight it by lobbying.

  8. Nicko says:

    I’m 50% cash. Long live the Benjamin’s!

    • Trey says:

      Benjamin’s life may be shorter than you think.

      At a lowly 3% inflation rate, your Benjamin with be a Grant in 23 years. At a 4% inflation rate, your Benjamin with be a Grant in 17 years.

      Enjoy him while he lasts.

  9. Ishkabibble says:

    “But its war on cash is not over. ……………….. It also broadens the DEFINITION OF CASH to include precious stones, PRECIOUS METALS, and prepaid credit cards.”
    So gold is in fact money. The European Elite are telling us so.

    This change of the definition of cash to include precious metal is troubling news, but not surprising in the least. Changing the definitions of words is the Elite’s preferred method of using existing law to suit whatever purpose they desire, without having to undertake a perhaps lengthy political process to change the law or introduce a new law. For example, the definition of words such as inflation, GDP, terrorism, combat, self-defense, peace, war, etc. are changed almost daily to suit whatever purpose the Elite want at the moment.

    Another reason that the European Elite don’t yet want to ban cash is that, like the US Elitte, they sometimes use cash to pay their mercenaries to commit acts of terrorism in other countries. For example:
    If cash were to be banned, another way would have to be found to pay their mercenaries and that way would be more easily traced back to the Elite. Either that or the Elite would have to send the young people of their nations to do the terrorism. Body bags would start showing up on the Elite’s MSM. “We” can’t have that now, can we.

    Then there’s all that drug cash flowing into various European and US TBTF banks. Do these institutions really want to stop that flow?

    Then there’s all that cash that the highway robbing-police forces are robbing. Very lucrative “business model”, legal robbery.

    Lastly, I don’t think that “public consultations” mean a damned thing to the Elite. For example, the ongoing Elite challanges to the results the first UK Brexit referendum and the 2016 US presidential election tend to support this contention, so far anyway. IMO, we’ll be certain within a year if the word “democracy” has undergone a makeover similar to that of the word “cash” . After all, just exactly what IS a “democracy” nowadays?

  10. K Simi says:

    Every time you pay with a card you invite identity fraud. Especially at gas pumps.

  11. hotairmail says:

    The EU have always loved huge denomination notes that could be used easily by the criminal fraternity in their French-inspired dreams of displacing the US dollar and taking advantage of its own “exhorbitant privilege”.

  12. Unamused says:

    If you use a lot of plastic to pay for every little thing you have to track your purchases, your account balances, your payment dates, your renewal dates, your renewal charges, if any, your customer loyalty points, your credit score, your password lists, your identity thieves, your interest rates, and market interest rates.

    It can be like having a part-time job, except this one really does pay nothing, instead of the usual next to nothing.

    I rarely use plastic. It’s just way inconvenient.

  13. max says:

    It is all due to the French universal government health/hospitalization scheme “égalité, fraternité, liberté” – to pick and chose:
    You want to wait forever for elective surgery? Use Social Security (“Sécu”)
    You want it a little bit faster, have surgery before you die? Get a “Mutuel”.
    You want instant service, even on weekends? Pay cash!
    True story, personal experience.

    • alex in san jose AKA digital Detroit says:

      Since you specify “elective” I don’t see a problem with that.

      A NHS should not pay for boob jobs.

  14. Old Farmer says:

    I have a stall at the farmers market, and my business is cash only. People under the age of 25 generally do not have cash, and so they walk away without buying even when there’s something they want. Five years ago I would lose one or two sales per market because I don’t take card; now its 15 to 20 sales. Some of the vendors use square on a smart phone for credit sales,but I don’t have a phone and don’t intend to get one (part of a lifestyle of voluntary simplicity). Clearly, there is a demographic dimension to the use of cash, which suggests that in the long run cash will go away.

    • alex in san jose AKA digital Detroit says:

      Some farmer’s markets set up ATMs for this reason.

  15. raxadian says:

    So the EU now wants less tourism? Because a lot of tourists use cash due to the difficulty of using credit and debit cards in a foreign country.

    And now if a tourist visits the EU and buys a wedding ring, the EU wants to take said ring away when they leave?

    More power for online sales then!

  16. peter says:

    Ban cash and bring on a popular revolt. Maybe it’ll be the one thing people will get some balls about and fight back against the corrupt banks, multinationals and politicians who all wave two fingers at the rules, but make it harder and harder for the honest middle income population to earn a living. It’s all about control, more tax money and making us less independent. Wake up folks.
    But banning cash would be the best way to really get people fired up. Bring it on. Might be the catalyst we all need to smell the crap pile we live in now.

  17. jj says:

    The war on cash has nothing to do with tracing all transactions or money laundering or even increasing tax revenues as these are all a smoke screen. The real reason is for banks to be able to drastically cut expenses. I used to work for an IT firm who did bank mergers. Dealing with cash has enormous cost not only for banks but for all businesses. Take a business who must count and then bag cash and then pay for armored car service to be transported to a bank. Small businesses must do the same except physical take and deposit it at their bank. Even convenient stores use armored cars. Then at the local branch small cash deposits must be re-counted by employees and then a final counts at the end of the day then armored cars then transport to a central location in a building with no identification where it is again counted, placed on pallets and shrink wrapped and then transported by tractor and trailer to the local FED branch. Guess what it is counted again!
    Then you have the cost of the building where cash is transported to locally before moving to the FED. There is the cost of the building, insurance, utilities, security, IT infrastructure costs, security fencing, entry gates with armed guards, etc, etc etc. Most people are unaware what goes on behind the scenes that businesses and banks have to deal with. Now multiply this all over the US as the example above is just one local bank. Folks the cost is in the billions for businesses and banks.
    Another cost that has drastically gone down is check processing since the debit card. In the above example there was locally a huge building filled with people and mainframes, switches, routers, servers, etc, etc, etc. Checks were transported here not only from the banks branches but also from smaller banks who paid to have their customers checks cleared. Again the costs are enormous.
    When you add these on a national level and see what the cost really are to use cash and checks is it any wonder banks want to go cashless and checkless? It is all about cutting expenses!

  18. Andre L says:

    Cash is the duct tape that holds modern economies together.

  19. flyingkiwi says:

    Spent 6 weeks in Europe June and July. tried to use the wifes debit card loaded with Euros. Card malfunctioned. Could not be replaced as we were travelling to a different destination each day.
    In Malaysia two weeks ago on the way home. Used credit card on well known site to book a bus from Kuala Lumpur to Singapore. Two days later bank cancelled the credit card after picking up 4 attempted fraudulant purchases by some scum bag who worked for the credit card clearing company. Now 2 weeks later still no replacement card.
    Went to use different credit card, from another bank, at local store after arriving home from Malaysia but so sorry sir our terminal is down.
    Next day tried to use EFTPOS card in local town but power was out after a tree fell during a storm and took out the power for 24 hours. ALL THIS IN AN OECD HIGHLY RATED COUNTRY.
    Thankfully I carry cash including when in Europe.
    Also people need to check to see who controls most of the software that will do the electronic transactions, Mr Gates.

  20. Surf@jm says:

    And during a natural disaster, when the electricity is off, just how much is your plastic going to buy you then?…….

    Maybe you can wait while your starving and stranded for some politician to send you a voucher to buy stuff…….

    Yeah, great thinking dillweeds……

  21. KiwiOz says:

    Completely agree with you Kiwiflyer. A local Woolies store was being used as a ‘trial’ run for ‘non-cash’ store – (meaning that it was ESSENTIAL to use a piece of plastic to buy anything at all). Well.. it just so happened there was rather bad storm, and a bolt of lightning took out a grid transformer, so… no power for about 8 hours. They couldn’t even take any cash as a temporary substitute…. because said power outage also meant that their ‘electronic’ instantly updating CENTRALISED warehouse located maybe 100’s of Km away couldn’t have its electronic inventory system updated, because the store’s check-out scanner used to verify the item and its current price wasn’t working either. So.. staff have to twiddle thumbs, cant do anything, customers can’t buy anything… a complete shambles.

    And yes, I make all my minor purchases using cash – and ‘minor’ also includes the odd item from time to time thats up over the $100 mark. Got completely fed up with… card starts to misread because either its too worn, or the shops card reader is dirty from having cards put through it all day, having to put the goods down in order to get my wallet out and then fish out the card, then put it away again, then pick up the goods again… we all know the routine we have to go through sometimes… Cash can be 90% faster. And as for the ‘self-checkout’ kiosks, well… I know how to use them, but simply can’t be bothered most of the time, the check-out operator is often much much quicker.

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