Abolishing cash in Europe: the benefits and drawbacks of electronic transactions

Abstract

Many proposals favouring cash abolition have emerged over the past few years. Their economic and social impact has not yet been analysed in depth. This paper aims to present the evolution of the means of payment during the last decades and to analyse the issue of cash abolition in European economies. The creation of a cashless economy would bring benefits, such as efficiency increase, as well as problems: the disturbance of money supply, instability of the foreign exchange rate, and so on. The paper discusses the reasons and arguments expressed by supporters and opponents of cash abolition and focuses on possible consequences, from the economic point of view. The advantages, disadvantages, benefits and costs associated with the possibility of removing cash from the economy are also described. Finally, a possible scenario for the future is analysed.

The cashless man: do preferences matter?

“…In France and Italy, 4 the limit has been 1,000 euro for fiscal residents since 2015, whereas in Spain, the limit is 2,500 euro (Gikas et al 2018). In these countries, expe- riencing cash payment limitations, it is possible that purchases of higher value were fragmented into multiple transactions, resulting in a higher number of transactions than expected, given the consumer preferences and the value of cash transactions.…”