Opinion of the European Central Bank of 10 November 2010 on restrictions on cash payments (CON/2010/79)
Date: 2010-11-10
Institutions: European Central Bank
Subjects: Bulgaria, money, national law, payment, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 November 2010 

on restrictions on cash payments 

(CON/2010/79) 

Introduction and legal basis 

On 4 October 2010 the European Central Bank (ECB) received a request from the Bulgarian Ministry of 

Finance for an opinion on a draft law on restrictions on cash payments (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  second  and  fifth  indents  of  Article  2(1)  of  Council 

Decision 98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities  regarding  draft  legislative  provisions1,  as  the  draft  law  relates  to  means  of  payment  and 

payment  and  settlement  systems.  In  accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of 

Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1   The  draft  law  is  intended  to  limit  cash  payments  within  Bulgaria  to  BGN  5  000  (around 

EUR 2 557) or its foreign currency  equivalent.  Payments  amounting  to  or  exceeding  BGN  5 000 

are  to  be  made  either  via  a  transfer  or  a  deposit  in  a  payment  account.  Also,  in  order  to  avoid 

circumvention of this restriction, the draft law provides that separate cash instalments on a single 

contractual monetary obligation must also be made via a transfer or a deposit in a payment account, 
if  such  contractual  monetary  obligation  amounts  to  or  exceeds  BGN  5  0002.  This  prohibition 

applies equally to individuals and legal entities with the only distinction being the difference in the 
amount of the fine to be imposed in the case of non-compliance3. In addition, the draft law amends 

Bulgaria’s  Labour  Code,  providing  for  payment  of  any  employment  remuneration  only  to  the 

payment account specified by an employee or a worker if payment services providers operate at the 
place of residence or work of that employee or worker4.  

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2 
3 
4 

OJ L 189, 3.7.1998, p. 42. 
See Article 1 of the draft law. 
See Article 2 of the draft law. 
See §3 of the Transitional and Final Provisions of the draft law.  

 
 
 
 
 
                                                      
1.2  According  to  the  explanatory  memorandum,  the  widespread  practice  of  not  recording  cash  flows 

for  accounting  purposes  constitutes  a  major  problem  for  the  Bulgarian  economy.  Cash  payments 

are  currently  used  to settle  transactions  involving  legal  entities  and  individuals  and  to pay 

employment remuneration. This has resulted in tax evasion and lower social insurance and pension 

contribution  payments.  Therefore,  the  adoption  of  the  draft  law  aims  at  significantly  increasing 

national revenue and helping to shrink the grey economy in Bulgaria. 

1.3 

In addition, the introduction of restrictions on cash payments is intended to provide for a stricter 

measure  tailored  to  the  specific  situation  in  Bulgaria,  to  properly  address  the  risk  involved  with 
large cash payments, as described in recital 18 of Directive 2005/60/EC5. 

1.4  The explanatory memorandum further points out that the banking sector in Bulgaria has built up a 

widespread bank branch network, which will be able to process the increased volume of non-cash 

payments, following the adoption of the draft law.  

2.  

Specific observations 

2.1   The ECB notes that Union law only regulates restrictions on cash payments in euro6. However, for 

consistency reasons, the ECB considers it appropriate to assess the draft law’s provisions against 

the relevant Eurosystem practices. 

2.2 

In this context, the ECB notes that the draft law is in compliance with Union law7, and in particular 

with recital 19 of Council Regulation (EC) No 974/98, which states that ‘limitations on payments 

in notes and coins, established by Member States for public reasons, are not incompatible with the 

status  of  legal  tender  of  euro  banknotes  and  coins,  provided  that  other  lawful  means  for  the 

settlement of monetary debts are available’. The ECB acknowledges that such other lawful means 

are available in Bulgaria. The ECB further notes that the draft law’s prohibition of cash payments 
of and above BGN 5 000 does not affect the legal tender status of lev banknotes8. 

2.3  Finally, the ECB acknowledges that the draft  law’s objectives of: (i) addressing national revenue 

shortages,  especially  at  times  when  Member  States  are  urged  to  implement  necessary  fiscal 

consolidation  measures;  (ii) shrinking  the  grey  economy  in  Bulgaria;  and  (iii) enforcing  stricter 

anti-money-laundering  measures  tailored  to  the  Bulgarian  situation,  qualify  as  public  benefits 

outweighing  the  impact  of  the  draft  law’s  restrictions  on  cash  payments.  Therefore,  the  ECB 

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6  

7  
8  

Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of 
the financial system for the purpose of money laundering and terrorist financing (OJ L 309, 25.11.2005, p. 15). 
See  recital 19  of  Council  Regulation  (EC)  No  974/98  of  3  May  1998  on  the  introduction  of  the  euro  (OJ  L  139, 
11.5.1998, p. 1). 
See paragraph 5 of Opinion CON/2002/24, reiterated in paragraph 2.3.2 of Opinion CON/2010/36.  
The legal tender status of lev is laid down in Article 24 and Article 25(2) of the Law on the Bulgarian National Bank, 
published in Darjaven vestnik, issue 46 of 10 June 1997. 

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considers the draft law’s limitations on cash payments in lev banknotes and coins proportionate to 

the objectives pursued. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 10 November 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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