The European Parliament has approved a directive that will severely limit the use of cash.
Under the directive, ostensibly aimed at curbing money laundering and the funding of terrorism, anonymous cash payments over €3,000 will be banned in commercial transactions. In business transactions, cash payments over €10,000 will be completely banned. Anonymous payments in cryptocurrencies will also be completely banned.
“Under the guise of combating money laundering, you are actually waging a war against cash which has protected our financial privacy since time immemorial,” said German Pirate Party MEP Partick Breyer—one of the few opponents of the measure—during the plenary session.
“You want to force our finances into traceable and increasingly shaky banking systems that can block our cards and accounts at any time and introduce negative interest rates. We will live to regret it. I tell you: Anyone who tampers with cash is tampering with our financial freedom. And to us Pirates there is no doubt that the finances of honest citizens is none of your business! Hands off our cash, our digital currencies! We say no to this to this creeping financial disenfranchisement.”
The regulation has been debated since 2016, going through the usual long process of EU lawmaking. Parliament gave its final approval on April 25. It still needs to be approved by the European Council before becoming law.
According to its opponents, the rule is highly unpopular and will be ineffective in achieving its goal of preventing crime.
Breyer points out that cryptocurrency is already traceable when necessary as it operates through a blockchain peer-to-peer computer network. He adds that law enforcement has already effectively traced and caught criminals committing financial crimes or laundering money from illegal activities through cryptocurrencies. He also notes that during the public consultation period on the directive, it proved highly unpopular among citizens in EU member states, with 90% of respondents weighing in against the measure, citing the use of cash as an essential personal freedom.
Experts have also warned that it will do little to prevent crime while harming ordinary citizens, particularly the most vulnerable.
“On the other hand, [cash payment limitations] may bring about higher transaction costs, undermined privacy, weakened trust to institutions, basic rights violations, bank-runs and bail-in regulations that place citizens’ savings at risk of devastating losses,” Nikos Passas, Professor of Criminology and Criminal Justice at Northeastern University, stated in a blog post.
“Expatriates’ options for developmentally vital remittances would be constrained, and fund flows to needy and fragile communities potentially disrupted or diverted to less monitorable channels.
“In addition, there may be monetary policy dysfunctions, losses for savers (negative interest rates), and harm to legitimate cash industry interests. Moreover, these challenges will affect the most vulnerable parts of the population (elderly, migrants, unbanked, remittance recipients etc.).“
