Opinion of the European Central Bank of 11 July 2017 on limitation of cash payments (CON/2017/27)
Date: 2017-07-11
Institutions: European Central Bank
Subjects: Bulgaria, fight against crime, money, national law, payment, tax offence

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 July 2017 

on limitation of cash payments 

(CON/2017/27) 

Introduction and legal basis 

On  27  June  2017  the  European  Central  Bank  (ECB)  received  a  request  from  the  Bulgarian  Ministry  of 

Finance for an opinion on a draft amendment to the law on limitation of 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 indent of Article 2(1) of Council Decision 98/415/EC1, 

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 seeks to gradually decrease the maximum limit for cash payments in Bulgaria from 

the current limit of BGN 10 000 to BGN 1 000 by 2019. The same maximum limit would apply to the 

payment of instalments in performance of a contractual obligation where the total amount is above 

the maximum limit. 

1.2  As in the currently applicable law, the maximum limit would apply both to payments in BGN, as well 

as payments in foreign currencies which are of equivalent amounts. 

1.3 

In the explanatory memorandum accompanying the draft law the consulting authority explains that 

the  draft  law  is  in  line  with  the  Government’s  objectives  to  reduce  the  shadow  economy  and 

perceives that this is in conformity with the current practice in other Member States. The consulting 

authority  also  explains  that  the  draft  law  will  help  reduce  the  possibility  of  concealing  accounting 

information  concerning  revenue  generated  by  the  sale  of  goods  and  services,  and  paid  salaries 

and wages for which no taxes and social security contributions are deducted. 

2. 

Observations 

2.1  The  ECB  notes  that  Bulgaria  is  a  Member  State  with  a  derogation  pursuant  to  Article  139  of  the 

Treaty, and has obligations regarding the achievement of economic and monetary union pursuant 

to  Article  140  of  the  Treaty.  Against  this  backdrop,  the  ECB  has  prepared  an  assessment  of  the 

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Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
 
                                                 
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draft  law’s  provisions  against  relevant  practices  in  the  euro  area,  in  particular  the  legal 
requirements for the euro and the legal tender status of euro banknotes2.  

2.2  Under  the Treaty,  the European System of Central Banks  (ESCB)  is  required to act, inter alia,  in 

accordance  with  the  principle  of  an  open  market  economy  with  free  competition,  favouring  an 
efficient allocation of resources3. The ESCB has the basic task of promoting the smooth operation 
of payment systems4, and the ECB has the exclusive right to authorise the issue of euro banknotes 
within  the  Union5.  The  euro  banknotes  issued  by  the  ECB  and  the  national  central  banks  of  the 

euro  area  shall  be  the  only  banknotes  to  have  the  status  of  legal  tender  status  within  the  euro 
area6. 

2.3  The Commission Recommendation of 22 March 2010 on the scope and effects of legal tender of 
euro  banknotes  and  coins7  (hereinafter  the  ‘Commission  Recommendation’)  states  that  the 

acceptance of payments in cash should be the rule, but acknowledges that cash may be refused 

for reasons related to the ‘good faith principle’, without this constituting a breach of the legal tender 

status of cash. Neither Union law nor the Commission Recommendation explicitly address whether, 

nor to what extent, it may be permissible to introduce a more general limitation to the obligation to 

accept  euro  cash  payments.  Therefore,  Union  law  must  be  interpreted  in  order  to  ascertain  the 

conditions  that  a  limitation  on  payments  in  euro  notes  and  coins  should  fulfil,  including  the 

conditions  that  should  be  fulfilled  to  comply  with  the  legal  tender  status  of  euro  banknotes  and 
coins when general limitations to the obligation to accept cash payments are introduced8. 

2.4  Recital  19  of  Council  Regulation  (EC)  No  974/989,  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’10,  has  been  taken  into  account  in  previous  ECB 

opinions  considering  the  introduction  of  cash  limitations  under  draft  national  laws.  While  other 

lawful means for the settlement of monetary debts, which ensure similar benefits to those of cash, 

are  available  in  Bulgaria  for  business  involving  transactions  with  consumers,  their  general 

availability  to  all  parts  of  society,  at  comparable  costs  as  cash,  should  be  closely  verified  by  the 

consulting authority. 

2.5 

In this respect, Directive 2014/92/EU of the European Parliament and of the Council11 has made it 

easier  for  Union  citizens  to  obtain  payment  accounts  and  related  electronic  payment  services  as 

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See  paragraph  2.1  of  Opinion  CON/2017/8  and  paragraph  2.1  of  Opinion  CON/2010/79.  All  ECB  opinions  are 
published on the ECB’s website at www.ecb.europa.eu 

See  Article 127(1)  of  the  Treaty  and  Article  2  of  the  Statute  of  the  European  System  of  Central  Banks  and  of the 
European Central Bank (hereinafter the ‘Statute of the ESCB’). 

Article 127(2) of the Treaty and Article 3.1 of the Statute of the ESCB. 
Article 128(1), first sentence of the Treaty and Article 16, first sentence of the Statute of the ESCB. 
Article 128(1), third sentence of the Treaty and Article 16, third sentence of the Statute of the ESCB. 

OJ L 83, 30.3.2010, p. 70. 

See paragraph 2.1 of Opinion CON/2017/18 and paragraph 3.1 of Opinion CON/2017/20. 
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, for example, Opinions CON/2013/18, CON/2014/4 and CON/2014/37.  
Directive 2014/92/EU of  the  European  Parliament and of the Council of 23  July  2014 on the comparability  of  fees 
related  to  payment  accounts,  payment  account  switching  and  access  to  payment  accounts  with  basic  features 
(OJ L 257, 28.8.2014, p. 214). 

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alternatives  to  cash12.  In  Bulgaria  the  law  on  payment  services  and  payment  systems  aims  to 

create  the  conditions  for  making  a  minimum  set  of  banking  services  accessible  to  all  citizens. 

However,  such  banking  services  and  electronic  payment  services  offered  by  commercial  entities 

may be subject to charges. 

2.6  The ECB acknowledges that the draft law’s objectives of limiting the share of the shadow economy 

and combating tax evasion might, in general, constitute ‘public reasons’ justifying the establishment 

of  limitations  on  cash  payments.  However,  any  limitation  needs  to  comply  with  the  legal  tender 

status  of  euro  banknotes.  Therefore,  it  would  need  to  be  demonstrated  that  the  proposed  cash 

payment  limitations  affecting  the  legal  tender  status  of  euro  banknotes  would  be  effective  as 

regards  the  achievement  of  the  public  objectives  that  are  being  legitimately  pursued  by  the 

limitations. Hence, there should be clear evidence that such limitations are likely, in fact, to achieve 

the stated public goal of reducing the size of the shadow economy and combating tax evasion. 

2.7 

Limitations on  cash payments  should  also 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 

measures  set  out  in  the  draft  law  affect  transactions  between  natural  persons  and  involve 

payments  for  relatively  small  amounts.  Any  negative  impact  of  the  proposed  limitations  should 

therefore be carefully weighed against the anticipated public benefits. When considering whether a 

limitation  is  proportionate,  the  adverse  impact  of  the  limitation  in  question  should  always  be 

considered, as well as whether alternative measures could be adopted that would fulfil the relevant 
objective  and  have  a  less  adverse  impact13.  Cashless  means  of  payments  that  provide  similar 

advantages  as  payments  in  cash  are  currently  not  available  for  transactions  between  private 

persons.  

2.8  Furthermore, it should be borne in mind that the ability to pay in cash remains particularly important 

for  certain  groups  in  society  that,  for  various  legitimate  reasons,  prefer  to  use  cash  rather  than 

other payment instruments. Cash is generally also appreciated as a payment instrument because it 

is,  as  legal  tender,  widely  accepted,  fast  and  facilitates  control  over  the  payer’s  spending. 

Moreover, it is still the only means of payment that allows citizens to instantly settle a transaction in 

central bank money  and at face value, without the legal  possibility to impose  a  fee for the use of 

this means of payment. Additionally, cash payments facilitate the inclusion of the entire population 

in the economy by allowing it to settle any kind of financial transaction in this way.  

2.9  Establishing a cash limit for all transactions between private individuals (as opposed to only sector-

specific cash limitations over taxable transactions)  does  not mitigate the risk of tax evasion  as  in 

many  circumstances  such  transactions  are  not  taxable.  Instead,  it  only  makes  it  more  difficult  to 

settle  legitimate  private  transactions  using  cash  as  a  means  of  payment,  thus  endangering  the 

concept of legal tender enshrined in the Treaty.  

12   Within the framework previously created by Directive 2007/64/EC of the European Parliament and of the Council of 
13  November  2007  on  payment  services  in  the  internal  market  amending  Directives  97/7/EC,  2002/65/EC, 
2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ L 319, 5.12.2007, p. 1), which introduced the legal 
basis for the creation of an internal market for payments within the Union and allowed for the creation of the Single 
Euro Payments Area (SEPA). 
See, for example, paragraph 2.3 of Opinion CON/2014/4, paragraph 2.3 of Opinion CON/2014/37 and paragraphs 
2.6 and 2.7 of Opinion CON/2017/8. 

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2.10 

In particular, the decreasing limits on cash payments proposed by the draft law need to take into 

account  the  advantages  of  having  limits  on  cash  payments  in  place  and  the  potential 

inconvenience  thereof  for  citizens’  regular  transactions  in  certain  market  segments.  Setting  the 

limitation  at  these  levels  may  make  it  difficult  to  implement  the  limit  in  practice.  In  this  regard,  it 
should  be  noted  that  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the  Council14, 

whilst  confirming  the  vulnerability  of  large  cash  payments  to  money  laundering  and  terrorist 

financing, nevertheless applied customer due diligence measures to cash payments of EUR 10 000 

or more. This implies that the draft law should establish a proportionate threshold for limits to cash 

payments, taking into account the objectives of such limits. 

2.11  Against  this  background,  the  ECB  considers  the  lowering  of  the  limit  on  cash  payments  to  BGN 
1000  (approximately  EUR  500)  by  the  1st  of  January  2019  as  disproportionate,  in  the  light  of  the 

potentially adverse impact on the cash payment system. In case the legislator wishes to pursue the 

proposed cash payment limitations a higher threshold should be chosen and a degree of flexibility 

should  be  introduced  in  the  draft  laws  by,  for  example,  allowing  the  delivery  and  receipt  of  cash 
payments for compelling reasons or for reasons that are outside the individual’s control15, such as 

where no payment service provider is available at the place or time of the payment. It might also be 

advisable to allow cash transactions above the defined thresholds as long as the parties are able to 

ensure that the payment is traceable by identifying the amount, the reason for the transaction and 

the parties involved. 

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

Done at Frankfurt am Main, 11 July 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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15  

Directive (EU) 2015/849 of the European Parliament and of the Council of 29 May 2015 on the prevention of the use 
of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  amending  Regulation  (EU)  No 
648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing  Directive  2005/60/EC  of  the  European 
Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73). 

See Opinions CON/2013/18 and CON/2014/37. 

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