Opinion of the European Central Bank of 17 January 2014 on limitations on cash payments (CON/2014/4)
Date: 2014-01-17
Institutions: European Central Bank
Subjects: Lithuania, fight against crime, money, national law, payment, tax evasion, underground economy

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 17 January 2014 

on limitations on cash payments 

(CON/2014/4) 

Introduction and legal basis 

On  11  December  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Lithuanian 

Ministry of Finance for an opinion on a draft law amending the Civil Code of Lithuania (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 indent 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. 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  aims  to  combat  tax  evasion  and  the  shadow  economy  by  means  of  providing  that 

transactions between any persons can only be settled or paid in cash if their amount is not higher 

than LTL 10 000 (around EUR 2 900) or the foreign currency equivalent. The draft law also allows 

other laws to establish lower limits for such settlements and other payments, and cases where only 

non-cash settlement is possible. 

1.2  The draft law also expands the list of intermediaries through which non-cash settlements or other 

payments  can  be  made.  In  addition  to  banks,  such  settlements  can  be  effected  through  any  other 

payment service providers. 

1.3  The  proposed  limitations  are  subject  to  several  exceptions.  First,  the  limitations  apply  to 

settlements and other payments to be made on the basis of transactions, while any other payments 

are  not  affected,  e.g.  dividends  and  bonuses  paid  by  companies,  other  payments  to  shareholders, 
compensation  for  damages2.  Second,  the  amount  of  cash  is  not  limited  if  a  person  is  settling  or 

paying for a transaction by paying or withdrawing cash through a payment service provider; in this 

case the persons need to prove their identity. Third, the limitations are not applicable if immediate 

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2 

OJ L 189, 3.7.1998, p. 42. 
Examples of such exceptions are provided for in the explanatory memorandum. 

 
 
 
 
                                                 
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non-cash settlement is not possible due to (a) the fact that no payment service provider operates at a 

location where a settlement or payment is taking place (e.g. in remote rural locations), or (b) other 

‘objective  reasons’,  e.g.  a  transaction  is  made  on  a  day  when  payment  service  providers  and/or 

payment and settlement systems are not operating. Such cases should be reported to the competent 

national authority. 

2. 

General observations  

2.1  Although  Union  law  only  regulates  restrictions  on  cash  payments  in  euro,  the  ECB  considers  it 

appropriate to assess the draft law’s provisions against the relevant Eurosystem practices.  

2.2  The  draft  law  is  in  compliance  with  Union  law,  and  in  particular  with  recital  19  of  Council 
Regulation  (EC)  No  974/983,  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’4.  The  ECB  acknowledges  that:  (a)  other  lawful  means  for  the 

settlement  of  monetary  debts,  ensuring  similar  benefits  to  those  of  cash,  are  indeed  available  in 

Lithuania;  and  (b)  the  draft  law’s  objectives  of  combating  tax  evasion  and  the  shadow  economy 

qualify as public reasons outweighing the impact of the limitations on cash payments.  

2.3 

In  any  case,  limitations  on  cash  payments  should  be  proportionate  to  the  objectives  pursued  and 

should not go beyond what is necessary to achieve such objectives, especially in view of the fact 

that the draft law’s measures may also affect relatively low value payments. Any negative impact 

of the proposed limitations should be carefully weighed against the public benefits expected to be 

derived from them.  

3. 

Specific observations 

3.1  The  draft  law  provides  that  non-cash  settlements  are  to  be  made  through  the  payment  service 

providers with which the relevant accounts are opened, if other laws do not provide otherwise. 

However, as stated in the explanatory memorandum, 6.5 % of the Lithuanian population currently 

does  not  have  a  payment  account.  The  ECB  recommends  that  payment  accounts,  as  other  lawful 

means for the settlement of monetary debts other than cash, should be more easily accessible to the 

whole population. In this regard, the ECB notes the recent Union legislative initiatives in this field, 

in particular the proposal for a directive on the comparability of fees related to payment accounts, 
payment account switching and access to payment accounts with basic features5.  

3 
4 
5 

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 most recently Opinion CON/2013/18. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
COM(2013) 266 final. See also Opinion CON/2013/77, in particular paragraphs 2 and 3.3. 

2 

 
 
 
                                                 
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3.2  The  ECB  understands  that  the  draft  law  is  one  of  the  first  national  legislative  steps  concerning 
general  limitations6  on  cash  payments  in  combating  tax  evasion  and  the  shadow  economy7. 

Therefore, the proposed limitations are subject to several exceptions, as described in paragraph 1.3 

above. The ECB invites the consulting authority to consider whether the proposed limitations can 

achieve the objectives pursued in view of the number and open-ended nature of the exceptions. 

In  one  case,  no  limitations  apply  due  to  the  fact  that  no  payment  service  provider  operates  at  a 

location  where  a  settlement  or  payment  is  taking  place  or  due  to  other  ‘objective  reasons’;  such 

cases have to be reported to the competent national authority. However, the draft law is not clear as 

to what information (e.g. the transaction, the payment in cash or the objective reasons) should be 

reported  to  the  competent  national  authority,  or  by  whom  it  should  be  reported.  The  ECB 

understands that these matters will be specified in other legislation. 

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

Done at Frankfurt am Main, 17 January 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

6  

7  

Certain limitation on settlements in cash are already applicable for the purpose of combating tax evasion, as provided for 
in the recent amendment to the Law on tax administration, on which the ECB was consulted (see Opinion CON/2012/36). 
As stated in the explanatory memorandum. 

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