Opinion of the European Central Bank of 11 December 2020 on limitations on cash payments (CON/2020/33)
Date: 2020-12-11
Institutions: European Central Bank
Subjects: legal basis, money

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 December 2020  

on limitations on cash payments 

(CON/2020/33) 

Introduction and legal basis 

On  9  November  2020,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Danish 

Finanstilsynet  (Financial  Supervisory  Authority)  for  an  opinion  on  a  draft  law  amending  the  Law  on 

Danmarks Nationalbank, the Law on capital markets, the Law on measures to prevent money laundering 
and financing of terrorism, and various other laws 1 (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, third, fourth and fifth indents of Article 2(1) of Council 
Decision 98/415/EC2, as the draft relates to means of payment, Danmarks Nationalbank, the collection of 

statistics,  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 and description of the draft law 

1.1  This  opinion  addresses  the  three  parts  of  the  draft  law  which:  (a)  lower  the  existing  threshold  for 

certain  cash  payments  to  professionals  from  a  maximum  of  50  000  DKK  to  20  000  DKK  (from 

approximately  EUR  6  700  to  EUR  2  700);  (b)  ensure  that  the  opening  of  insolvency  proceedings 

against  a  participant  in  a  payment  or  securities  settlement  system  does  not  prevent  funds  or 

securities available on the participant´s settlement account from being used to fulfil its obligations in 

the  system  on  the  day  of  the  opening  of  insolvency  proceedings;  and  (c)  amend  the  Law  on 
Danmarks  Nationalbank 3  to  ensure  both  an  enhanced  legal  basis  for  Danmarks  Nationalbank’s 

collection  and  use  of  data,  including  for  statistical  purposes,  and  to  strengthen  the  confidentiality 

requirements  applicable  to  employees  and  members  of  the  decision-making  bodies  of  Danmarks 

Nationalbank, including when such data is shared with, inter alia, the ECB. 

1.2  The  lowering  of  the  threshold  for  certain  cash  payments  applies  to  professionals  who  are  not 

covered  by  the  scope  of  application  of  the  Law  on  measures  to  prevent  money  laundering  and 

1  

2  

3   

Forslag  til  lov  om  ændring  af  lov  om  en  garantifond  for  skadesforsikringsselskaber,  lov  om  investeringsforeninger 
m.v., hvidvaskloven og forskellige andre love. 
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). 
Lov om Danmarks Nationalbank, Lov nr. 116 af 7. april 1936.  som ændret ved lov nr. 166 af 13. april 1938, § 44 i 
lov nr. 88 af 15. marts 1939, lov nr. 67 af 15. marts 1967, § 90 i lov nr. 174 af 30. april 1969 og § 16 i lov nr. 579 af 
1. juni 2010. 

 
 
 
 
                                                 
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financing of terrorism4, and applies to this specific group of business-to-business payments and to 
customer-to-business  payments.  According  to  the  explanatory  notes  to  the  draft  law5  (hereinafter 

‘explanatory  notes’),  the  proposal  is  made  with  a  view  to  combating  money  laundering  and  they 
refer to recital 6 of Directive (EU) 2015/849 of the European Parliament and of the Council6 in this 

context,  which  provides,  inter  alia,  that  the  use  of  large  cash  payments  is  highly  vulnerable  to 

money  laundering  and  terrorist  financing,  and  that  Member  States  should  be  able  to  make 

additional  general  limitations  to  the  use  of  cash  and  further  stricter  provisions.  Further,  the 

explanatory  notes  detail  how  continuous  technological  and  digital  developments  have  in  general 

reduced cash payments of larger amounts, therefore the lowering of the threshold for certain cash 

payments is expected to have a limited impact on professionals and consumers.  

1.3  The  draft  law  also  introduces  the  option  given  to  Member  States  under  Article  4  of  Directive 
98/26/EC  of  the  European  Parliament  and  of  the  Council7,  according  to  which  the  opening  of 

insolvency proceedings against a participant in a payment or securities settlement system does not 

prevent  funds  or  securities  available  on  the  participant´s  settlement  account  from  being  used  to 

fulfil  its  obligations  in  the  system  on  the  day  of  the  opening  of  insolvency  proceedings.  The 
explanatory  notes 8  clarify  that  currently  and  going  forward,  Danmarks  Nationalbank  provides  a 

credit line (i.e. a guarantee) for settlements in VP Securities, the Danish national central securities 

depository.  Settlements  are  processed  either  in  real  time  or  in  batches  (at  fixed  times  during  the 

day),  and  a  credit  line  provided  by  Danmarks  Nationalbank  applies  to  real-time  and  dedicated 

batch settlement in VP Securities. National insolvency law provides that, in the case of insolvency 

proceedings  opened  against  a  participant,  its  settlement  account  at  Danmarks  Nationalbank  is 

frozen and the participant is no longer able to dispose of its funds, which Danmarks Nationalbank 

can apply by way of security interest to secure the credit line provided. However, the explanatory 

notes  state  that  Danmarks  Nationalbank  has  joined  TARGET2-Securities  (hereinafter  ‘T2S’),  the 

common platform for cross-border security settlements in Europe owned by the Eurosystem. T2S 

settles  transactions  mostly  in  real  time  on  a  delivery-versus-payment  (DvP)  basis,  i.e.  the  money 

and  securities  change  hands  simultaneously  and  with  finality  in  accordance  with  Directive 

98/26/EC. Therefore, according to the explanatory  notes, as a result of Danmarks Nationalbank’s 

affiliation  to  T2S,  doubts  have  arisen  as  to  whether  settlement  in  T2S  is  protected  against  the 

insolvency of a Danish participant in the course of a settlement day. In case of settlement failures 

due to insolvency in the course of a day, there is a risk that the failure to settle will have a knock-on 

effect in the system and create problems for other participants, which may undermine confidence 

that orders are executed in the system. It is therefore seen as important to ensure that resolution 

4  

5  
6  

7  

8  

Lov  om  forebyggende  foranstaltninger  mod  hvidvask  of  finansiering  af  terrorisme,  Lovbekendtgørelse  nr.  380  af 
2. april 2020. 

See point 2.13.2 of the general comments to the draft law. 
Directive (EU) 2015/849 of the European Parliament and of the Council of 20 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). 
Directive 98/26//EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment 
and securities settlement systems (OJ L 166,11.6.1998, p.45).  

See point 1.12.1 of the general comments to the draft law. 

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can  take  place  in  the  event  of  bankruptcy  through  the  funds  made  available  on  Danmarks 

Nationalbank’s dedicated settlement account. Ultimately, failure to settle due to bankruptcy is seen 

a possible cause for mistrust in the financial system. 

1.4  Finally, the draft law contains two amendments to the Law on Danmarks Nationalbank.  

1.5  The  first  amendment  proposes  to  establish  an  enhanced  legal  basis  for  the  Danmarks 

Nationalbank  to  collect  and  use  data  for  purposes  falling  within  its  fields  of  competence.  The 

explanatory  notes  state  that  data  collection  undertaken  today  by  Danmarks  Nationalbank  is 

understood  mainly  to  take  place  with  a  view  to  producing  statistics.  According  to  the  draft  law, 

Danish undertakings registered in the Central Business Register  will be obliged, upon request by 

Danmarks Nationalbank, to provide all data necessary for the Danmarks Nationalbank in order for it 

to  fulfill  its  objectives  as  defined  in  the  Law  on  Danmarks  Nationalbank.  As  stated  in  the 
explanatory  notes 9,  the  assessment  of  what  information  it  is  necessary  to  obtain  from  the 

undertakings  will  depend  on  Danmarks  Nationalbank’s  actual  performance  of  its  tasks,  and  the 

Danmarks  Nationalbank  therefore  arguably  has  considerable  discretion  to  decide  what  data  is 
relevant  for  the  fulfilment  of  its  objectives.  According  to  the  explanatory  notes10,  data  will  be 

collected  for  conclusions  and  decisions  taken  by  the  Danmarks  Nationalbank  in  relation  to  the 

monitoring of the Danish economy, financial stability, including credit risk, systemic risk, the capital 

and foreign exchange markets, and the establishment of financial statistics.  

1.6  The second amendment to the Law on Danmarks Nationalbank introduces a specific professional 

confidentiality regime for the employees and members of the decision-making bodies of Danmarks 

Nationalbank, including external hired help, an obligation which in all cases continues to apply after 
the  end  of  the  provision  of  services 11.  This  confidentiality  regime  entails  that  these  persons  must 

keep  confidential  information,  which  they  become  aware  of  when  executing  their  duties, 
confidential.  In  case  of  a  breach,  the  Criminal  Code12  applies,  as  a  result  of  which  fines  or 

imprisonment of up to 6 months, which in case of aggravating circumstances can be up to 2 years, 

can  be  imposed.  The  draft  law  maintains  the  existing  rules  on  the  transmission  of  confidential 

information to central banks in the European System of Central Banks (ESCB) and the European 

Systemic Risk Board (ESRB), and also introduces an exhaustive list of other domestic, European 

and  international  bodies  and  institutions,  including  central  banks  located  in  other  European 

Economic  Area  (EEA)  countries,  to  whom  confidential  data  may  be  transmitted.  The  draft  law 

further  provides  that  persons  who  receive  confidential  information  from  Danmarks  Nationalbank, 

including persons at ESCB central banks, are bound by the same professional secrecy obligation 

applicable  to  the  employees  and  members  of  the  decision-making  bodies  of  Danmarks 
Nationalbank.  According  to  the  explanatory  notes 13,  the  performance  of  tasks  relating  to 

international statistical cooperation may also be carried out either on the basis of European Union 

9  
10  
11  
12  
13  

See point 2.20.3 of the general comments to the draft law. 

See point 2.20.2 of the general comments to the draft law. 
See 20.1 to 20.3 of the amended Law on Danmarks Nationalbank (Lov om Danmarks Nationalbank).  
See Sections 152 to152e of the Criminal Code, Straffeloven, Lovbekendtgørelse nr. 976 af 17. september 2019. 

See point 2.21.2 of the general comments to the draft law. 

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regulations or, in the case of the Bank for International Settlements and the International Monetary 

Fund, on the basis of an agreement concluded with these organisations.   

2. 

Cash limitation  

2.1  The ECB notes that Denmark has an exemption from participating  in the third stage of  economic 
and  monetary  union14.  Against  this  specific  institutional  backdrop,  the  ECB  has  prepared  an 

assessment of the relevant provisions of the draft law against relevant practices in the euro area, in 

particular the legal requirements for the euro and the legal tender status of euro banknotes. 

2.2  Under the Treaty, the ECB has the exclusive right to authorise the issue of euro banknotes within 
the  Union 15.  The  euro  banknotes  issued  by  the  ECB  and  the  national  central  banks  of  the  euro 
area are the only banknotes with legal tender status within the Union 16.  

2.3  The  scope  and  effects  of  the  legal  tender  status  of  euro  banknotes  and  coins  has  not  yet  been 
defined in Union law.  According to  Commission Recommendation 2010/191/EU 17 (hereinafter the 

‘Commission Recommendation’), the concept of legal tender of the euro should rely on three main 

elements. First, there should be a mandatory acceptance of banknotes and coins unless the parties 

have  agreed  on  other  means  of  payment.  The  acceptance  of  euro  banknotes  and  coins  as  a 

means  of  payment  in  retail  transactions  should  be  the  rule.  A  refusal  to  accept  cash  should  be 

possible only if it is based on reasons related to the ‘good faith principle’. Second, banknotes and 

coins should be accepted at full face value. Third, banknotes and coins should have the power to 

discharge debts.  

2.4  The ECB notes that cash continues to play an important role in society irrespective of the fact that 

electronic  payment  instruments  are  increasingly  used  for  retail  payments  in  Member  States, 
including Denmark 18. As digital transformation progresses rapidly, Denmark is currently among the 
most digitalised countries in the world19, which, inter alia, enables the use of alternative means of 

payment.  While  in  2009  cash  payments  accounted  for  48%  of  the  total  number  of  payments  in 
physical trade in Denmark, the 2019 figure was down to 16% 20. It is recognised, however, 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.  These  groups 

include  not  only  elderly  people  but  also  some  disabled  citizens,  immigrants,  socially  vulnerable 
citizens, minors and others with limited or no access to digital payment services 21. The ECB notes, 

however,  that  the  use  of  cash  is  declining  in  Denmark,  also  e.g.  by  elderly  people,  as  cash 

14  
15  

16  
17  

18   
19  

20  
21  

See Protocol (No 16) to the Treaty on certain provisions relating to Denmark.  

Article 128(1), first sentence, of the Treaty and Article 16, first sentence, of the Statute of the European System of 
Central Banks and of the European Central Bank (‘Statute of the ESCB’). 

Article 128(1), third sentence, of the Treaty and Article 16, third sentence, of the Statute of the ESCB. 
Commission  Recommendation  2010/191/EU  of  22  March  2010  on  the  scope  and  effects  of  legal  tender  of  euro 
banknotes and coins (OJ L 83, 30.3.2010, p 70). 
See paragraph 2.4 of Opinion CON/2017/8. All ECB Opinions are published on EUR-Lex. 

See  page  2  of  Danmarks  Nationalbank’s  report  ‘Danes  primarily  opt  for  electronic  payment  solutions’, 
September 2020.  
See page 9 of Danmarks Nationalbank’s report ‘Cash payments are declining’, February 2020.  

See paragraph 1.5 of Opinion CON/2019/41. 

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payments as a share of the total  number of payments broken down  by  age shows that  people in 

the age group 70-79 years in 2017 used cash in 40% of their payments in physical trade, a number 
that  had  declined  to  22%  in  2019 22.  Still,  cash  is  generally  appreciated  as  a  payment  instrument 

because it is widely accepted, fast and facilitates control over the payer’s spending. In addition, it is 

the only payment instrument that allows citizens to settle a transaction directly, without relying on a 

third  party  service  provider.  Furthermore,  the  transaction  can  be  settled  in  central  bank  money 

instantly  and  at  face  value,  without  the  legal  possibility  of  imposing  a  fee  for  the  payment  in 
question23, appreciating that surcharges on card payments are also now prohibited by Union law24. 

Moreover,  cash  payments  facilitate  the  inclusion  of  the  entire  population  in  the  economy  since  it 
may be used to settle any type of financial transaction25. 

2.5  The Commission Recommendation states that the acceptance of payments in cash should be the 

rule, as noted above, but acknowledges that cash may be refused for reasons related to the good 

faith principle, without this being a breach of the legal tender status of cash. Neither Union law nor 

the Commission Recommendation explicitly addresses if and to what extent it may be permissible 

to introduce a more general  limitation to the obligation to  accept euro cash  payments. Therefore, 

Union law has to be interpreted in order to ascertain the conditions that a limitation on payments in 

euro  notes  and  coins  must  fulfil,  including  which  conditions  should  be  fulfilled  to  comply  with  the 

legal  tender  status  of  euro  banknotes  and  coins  when  introducing  general  limitations  to  the 

obligation to accept cash payments. In particular, with respect to limiting cash payments, recital 19 
of Council Regulation (EC) No 974/9826 should be taken into consideration. This recital 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  prevention  of  money 

laundering  and  financing  of  terrorism  qualifies  as  a  public  reason  outweighing  the  impact  of  the 
limitations on cash payments27.  

2.6  However, limitations on cash payments should also be effective and proportionate to the objectives 
pursued and should not go beyond what is necessary to achieve such objectives 28. This requires, 

inter alia, that, for the settlement of monetary debts other lawful means of payment are available. 

These other lawful means of payment should be readily accessible to all citizens in the respective 

Member State. Any negative impact of the proposed limitations should be carefully weighed against 

the anticipated public benefits.  

22  
23  
24  

25   

26  
27   
28  

See page 9 of Danmarks Nationalbank’s report ‘Cash payments are declining’, February 2020.  
See paragraph 2.1.6 of Opinion CON/2020/17. 

See  Article 62 of Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on 
payment  services  in  the  internal  market,  amending  Directives  2002/65/EC,  2009/110/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC  (OJ L 337, 23.12.2015, p. 35). 
See  paragraph  2.1.6  of  Opinion  CON/2020/17,  paragraph  2.6  of  Opinion  CON/2019/4,  paragraph  2.7  of  Opinion 
CON/2017/40, paragraph 3.4 of Opinion CON/2017/20, and paragraph 2.8 of Opinion CON/2017/27. 
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 2.2 of CON/2013/9. 

See paragraph 2.1.5 of Opinion CON/2020/17 and paragraph 2.3 of Opinion CON/2019/4.  

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2.7  With respect to the requirement for limitations to be proportionate, the ECB notes that the broader 

and more general a limitation is, the stricter should be the interpretation of the requirement for the 

limitation  to  be  proportionate  to  the  objective  pursued.  When  considering  whether  a  limitation  is 

proportionate, the adverse impact of the limitation in question should always be considered and it 

should  also  be  considered  whether  alternative  measures  could  be  adopted  that  would  fulfil  the 
relevant objective with a less adverse impact29.  

2.8  Finally,  it  is  of  relevance  to  note  in  this  context  that  Directive  2014/92/EU  of  the  European 
Parliament and of the Council30 has made it easier for Union citizens to obtain payment accounts 
and related electronic payment services as an alternative to cash31.  

2.9 

In  respect  of  the  lowering  of  the  threshold  for  certain  cash  payments,  the  proposal  follows  a 

previous  reduction  in  the  threshold  amount  in  2013,  when  it  was  reduced  from  DKK  100  000 
(approximately EUR 13 500), to the current threshold of DKK 50000. 32 At the time, the ECB noted 33 

that any impact of the proposed provisions should be carefully weighed against the public benefits 

expected to be derived from them. Also, in view of the fact that the measures affect relatively low 

value payments, competent authorities should ensure that the effects of these measures do not go 

beyond what is necessary for achieving the objective of combating money laundering and financing 

of terrorism. The explanatory notes do not clarify what the impact has been of the lowering of the 

threshold  for  certain  cash  payments  since  its  introduction  and  adoption  in  2013.  The  explanatory 

notes  also  do  not  clarify  why,  seven  years  after  the  lowering  of  the  threshold  for  certain  cash 

payments,  the  threshold  needs  to  be  further  reduced  to  just  around  one  fifth  of  the  pre-2013 

threshold.  

2.10  However, the ECB acknowledges that other lawful means for the settlement of monetary debts with 

similar  benefits  to  those  of  cash  are  generally  available  in  Denmark  also  above  the  proposed 

threshold  of  approximately  EUR  2  700.  Moreover,  as  noted  in  paragraph  1.2,  the  proposal  to 

further  lower  the  threshold  for  certain  cash  payments  applies  only  to  professionals  who  are  not 

covered  by  the  scope  of  application  of  the  Law  on  measures  to  prevent  money  laundering  and 

financing of terrorism, when receiving cash. Thus, the lowering of the threshold applies only to this 

specific  group  of  business-to-business  and  customer-to-business  payments.  In  this  respect,  the 

ECB  welcomes  the  fact  that  this  restriction  is  not  intended  to  apply  to  payments  between 

consumers.  Taking  this  into  account,  and  in  addition  to  the  above  general  observations,  the 

lowering  of  the  threshold  for  certain  cash  payments  as  set  out  in  the  draft  law  could  be  deemed 
proportionate to the objectives pursued34 and to not go beyond what is necessary to achieve such 

objectives. However, the ECB cannot elaborate on the effectiveness of the draft law on this point, 

since  no  substantiation  has  been  provided  to  this  effect  in  the  explanatory  notes,  and  since  the 

29  
30  

31  
32  
33  
34   

See paragraph 2.1.5 of Opinion CON/2020/17. 
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). 

Directive 2014/92/EU has been implemented in Denmark by Law No 375 of 27 April 2016 (Lov om betalingskonti). 
See Opinion CON/2013/9. 
See paragraph 2.3 of Opinion CON/2013/9. 

See paragraph 2.5 of Opinion CON/2019/46. 

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effect of the above 2013 reduction of the cash limitation ban has not been clarified. Also, in case of 

contingencies where alternative means of payment are temporarily not functioning, flexibility should 

be ensured for the settlement of payment obligations in cash.  

3. 

Settlement finality in case of insolvency of system participants 

Directive 98/26/EC is decisive for ensuring harmonised rules on irrevocability of payments and securities 

transactions  across  the  Union,  thereby  helping  to  avoid  systemic  risks  in  the  financial  system.  The 

Directive  ensures  that  collateral  security  is  insulated,  on  the  day  of  the  insolvency  of  a  participant  in  a 

system,  from  the  effects  of  the  insolvency  law  applicable  to  that  participant.  The  ECB  agrees  with  the 

arguments made in the explanatory notes to the effect that the unwinding of a settlement in a securities 

settlement  system  may  have  a  negative  impact  on  the  stability  of  financial  markets  and  institutions  in 

general,  and  arguably  in  particular  for  interconnected  systems  like  T2S.  The  irrevocability  of  transfer 

orders  is  a  prerequisite  for  the  smooth  and  efficient  functioning  of  T2S  in  the  event  of  a  participant 

becoming insolvent in the course of a settlement day. For these reasons the ECB strongly welcomes the 

draft law’s proposed amendments to Danish law to ensure settlement finality in case of the insolvency of 

a system participant.   

4. 

Collection and confidentiality of data collected and shared by Danmarks Nationalbank 

4.1  The  ECB  welcomes  the  provisions  of  the  draft  law  enhancing  the  legal  basis  for  the  Danmarks 

Nationalbank to collect and use data for purposes falling within its fields of competence, including 

but  not  limited  to  the  production  of  financial  statistics.  The  proposed  provision  is  formulated  very 

broadly allowing the Danmarks Nationalbank flexibility to define the required data depending on the 

task it is undertaking to fulfill its objectives.  

4.2  The  ECB  also  welcomes  that  the  existing  rules  on  the  transmission  of  confidential  information  to 

central  banks  in  the  ESCB  and  the  ESRB  are  maintained,  and  that  the  draft  law  extends  the 

transmission of confidential information to other domestic, European and international bodies and 

institutions, including central banks located in other EEA countries. 

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 11 December 2020. 

[signed] 

The President of the ECB 

Christine LAGARDE 

7