Back on 27th October 2010, while reflecting on the EFMA “Future of Cash” conference in Paris, I reported on the talk of Mr. Benjamin Angel, who is Head of Unit for Economic Aspects of Regulatory Policy, DG ECFIN at the European Commission [PDF Directory]. In part of his presentation, he referred to the Commssion’s instruction on legal tender, which requires retailers to accept low value coins (which some had stopped doing) and high value euro notes (which some had stopped doing). In fact, the recommendation, as I’m sure you’ll recall, says that (amongst other things)

* It should be the rule to accept high denomination banknotes
* No surcharges should be imposed on payments in cash
* Member States should not adopt new rounding rules to the nearest five cent

[From Paying with euro cash in the euro area: Commission recommendation on legal tender of the euro – ECFIN – European Commission]

This is, of course, a bad idea: it raises the costs for retailers and consumers for no net welfare gain and has only come about because of the euro currency’s symbolic status. Retailers should be entirely free to reject high denomination banknotes (which should not really exist anyway) and low value coins, pointless shrapnel that are value-destroying (because they cost more to make and distribute than they add to the economy). Rather flippantly…

I decided to try and bring the system down from within, so I spoke up and called for immediate action agains the Netherlands, where some shops in Amsterdam are to cease accepting cash from next week: let’s see what happens.

[From Digital Money: Behind enemy lines]

Today I am informed—via a wholly reputable source—that Mr. Angel has indeed sent a formal letter to the Dutch Consumer Authority (part of the Competition Authority) complaining that the Saturday organic farmers’ market in Amsterdam doesn’t take cash. This was covered here back in February, when I noted that the

Dutch Consumers’ Association are predicting cashless retailing within five years.

[From Digital Money: Only five more years?]

The DCA has, so I am told, replied to Mr. Angel that it feels there is no problem. Will Mr. Angel now starting proceedings against the Netherlands for defying a Commission recommendation? Stay tuned…

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

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