Controversial decisions in Europe around a "Payments restrictions Initiative"

Article published on March 26, 2017
Article published on March 26, 2017

This article has not been vetted by an editor at Paris HQ

The European Commission is slowly rallying its troops, in a bet to reduce the use of cash in the Eurozone, in order to fight financial misuse. But while supporters are numerous and powerful, a large popular blockade may be on the way to a cashless society.

The European Union, through its commission has been tip-toeing towards a cashless society for several years, now.  Killing off the 500-euro banknote was a skillful first step, as ordinary citizens seldom use them. By discontinuing the note, it was able to associate hard currency to crime and terrorism, the invoked reasons for the decision. The regulation forbidding cash transfers in excess of 10 or 15 000 euros within the European Union was presented as a way to prevent rich people from hiding money, rather than letting the ordinary man bear the entire brunt of taxation. It is what the EU is doing, and why it is doing it. It aims to completely dismiss cash from its economy, gradually, in order to increase the effect of its policies to tax, reform and maintain law and order.

The latest step has been the release of the ECFIN DDG 1 C 5 Inception Impact Assessment on January 23rd 2017, in which the EC stated: "Payments in cash are widely used in the financing of terrorist activities… In this context, the relevance of potential upper limits to cash payments could also be explored. Several Member States have in place prohibitions for cash payments above a specific threshold […] While a number of Member States already have (or have had) in place restrictions to cash payments as a measure to combat crime, this has not been addressed at Union level. In its Conclusions on the fight against terrorism, the Economic and Financial Affairs Council of 12 February 2016 called on the Commission to explore the need for appropriate restrictions on cash payments exceeding certain thresholds.” Simply put, the EC wishes to increase government control over financial transactions, so as to fight corruption, crime and terrorism, all of which are known to use cash.

A certain number of players are, or can be assumed to be, on board with the reform. Banks are likely to go along with it, as cash is often seen by them as tedious and expensive to manage, dangerous to hold, and, most of all, inaccessible to them as long as the cash remains in their customer's pockets. In fact some banks have already started kicking cash out, such as the Australian Citibank who announced : “This move to cashless branches reflects Citi's commitment to digital banking and we are investing in the channels our customers prefer to use”. 

National governments are also in favor of the European resolution, which would enable them to greatly increase their control and taxation revenue, by making all the money in the country visible to their agencies, tax offices, and police services. Finally, some public speakers advocate for a cashless society. Tim Worstall, economy-specialized contributor to Forbes, considers India's recent push towards a cashless society to be a good thing, while he recognizes it shouldn't go too far. He says: “For he's taking the practice of demonetization rather further, to the idea of a cashless society, rather than one just less dependent upon cash. This is, in my view, taking a good thing too far. For what cash does, in moderation of course, is frees us from the rigid imposition of the law.

But many are opposed to it, outside that world. Editorialists, sociologists, and even some bankers are blowing the whistle on what they deem to be a very dangerous move against democracy and fundamental civil rights. According to them, destroying cash would amount to deleting the last square mile of economic freedom for the citizen to conduct his business freely, without anyone peeking over their shoulder. The increase in monitoring capacities both by public organizations and private corporations has made many citizens concerned about what is to become of their fundamental liberties.

Tyler Durden, from Zero Hedge, warns: “If the minds behind a cashless society are allowed to have their way, America would become little more a monumental ant farm, where the elitist class studies Americans to a much greater extent than ever before — how we move around and what we do, use, eat, watch and listen to — and then uses this deeply insightful personal information, potentially to plot how to control everyone.” Brett Scott adds, for Max Keiser :“The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge”. The suppression of cash would bring a major shift in the balance of powers between governing bodies and their populations, who would then be confined within the surveillance scope of the state. 

The EU's only chance to push this motion through is to continue making discrete arrangements with individual governments from the eurozone. Those governments will be powerful allies who control the territory, the population, and who have serious incentive to help the European Commission push through. However, civil rights activists have all sorts of valid reasons to fear this reform and will attempt to raise public awareness against it. If they succeed in putting the matter to public debate, the EU will probably have no choice but to back down, in response to fears regarding fundamental liberties from its citizens.