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The ECB beats the government on cash

3 years ago babelfish
Legal tender currency

Legal tender currency

The ECB has beaten the Italian government twice over the limitation of cash, motivating its criticisms with a controversial issue that most people do not know and that economic experts ignore or hide: cash is today the only currency available. legal tender we have in Italy and the only one able to automatically and compulsorily pay off a debt.

Legal tender currency

To unravel this technical-legal skein, let's start from an old article written on this topic by Avv. Antonio Tanza whom I thank for his usual legal precision in analyzing this very delicate problem https://www.istitutopuglieseconsumo.it/il-conto-in-banca-e-obbligatorio/ .

I summarize the considerations of Avv. Antonio Tanza:

  • The state has practically forced us to have a current account, because for years it has abolished the cash for the crediting of salaries and for the payment of taxes. But this is illegal;
  • 1277 of the Civil Code “Monetary debts are extinguished with currency having legal tender in the State at the time of payment and for its nominal value”;
  • Art 693 Criminal Code "Anyone who refuses to receive, for their value, coins having legal tender status in the State, is punished with an administrative sanction of up to thirty euros";
  • The laws of the Italian State are clear: payments are made with LEGAL COURSE MONEY and no one can refuse to receive LEGAL COURSE MONEY;
  • The Bank of Italy maintains that “The only form of legal currency is CASH issued by a central bank – for the euro the European Central Bank (ECB)”;
  • The Bank of Italy always says that "The bank account money [or bank electronic money] is a form of PRIVATE MONEY". it is a private currency that brings PROFIT to banks;
  • So the only legal tender currency is CASH and no one can refuse to receive CASH for payments, while electronic bank money is not legal tender and therefore is voluntarily accepted.

The opinion of the Supreme Court

This issue has also been recently clarified by the Supreme Court which with sentence no. 26617 of 18/12/2007 specified that "the debtor has the right to pay, at his choice, in MONEY WITH LEGAL COURSE in the State or by delivery of CIRCULAR CHECK ; in the first case the creditor cannot refuse the payment, as, instead, in the second case he can only for justified reason to be evaluated according to the rule of fairness and objective good faith ".

He then specifies that for cash "the extinction of the obligation with the releasing effect of the debtor occurs in the first case with the delivery of the currency", while in the case of a cashier's check the debt is extinguished only "when the creditor actually buys the legal availability of the sum of money, the risk of the check being inconvertible falling on the debtor ".

In conclusion, the Supreme Court confirms the above stated by Avv. Tanza:

  • cash is legal tender and compulsory acceptance, therefore they extinguish the debt immediately and automatically;
  • electronic banking money is voluntarily accepted and extinguishes the debt if and only if "the creditor actually acquires the legal availability of the sum of money".

The ECB's opinion in the letter of 13 December 2019

The ECB has expressed itself several times on this issue, especially in conjunction with provisions of the Italian government regarding the limitations in the use of cash or the introduction of cashback, let's list the main letters:

The most complete letter is that of December 13, 2019, so it is to it that I will refer, but the same concepts are also reiterated in the other letters.

The ECB clarifies at the beginning of the letter why it must be consulted on matters relating to legal tender means of payment:

  • national authorities are required to consult the ECB on draft legislative provisions falling within its competences, including, in particular, those relating to means of payment;
  • The ECB requests to be consulted on the basis of its advisory competence under the TFEU.

The "consultative" nature of the ECB's competences on payment methods should be highlighted, so much so that on all three occasions the Government has maintained and continued to impose limitations on the use of cash, without taking into consideration the opinions expressed by the ECB, which implicitly recognizes that it is the State that has exclusive jurisdiction in monetary matters, as rightly provides for Article 117 of our Constitution in point e).

The ECB then goes into the merits of the Government's measures on cash limitations, highlighting its advisory opinion:

  • First , the acceptance of cash payments must be the norm, but it is permissible to introduce a restriction on the obligation to accept cash payments in euro, by establishing conditions for respecting the legal tender of euro banknotes and coins;
  • Second , the limitations on cash payments must respect the legal tender of euro banknotes, provided that there are other legal means of extinguishing pecuniary debts;
  • Third , in a Member State there may be other legal means of extinguishing financial debts other than cash payments, but it is necessary to verify their availability in all strata of society, at costs comparable to cash payments;
  • Fourth , the limitations on cash payments must respect the legal tender of euro banknotes enshrined in Articles 128 (1) and 282 (3) of the TFEU, clearly demonstrating that such limitations allow, in fact, to achieve the declared public purpose. the fight against tax evasion;
  • Fifth , however, there must be a proportion between the limitations on cash payments and the objectives pursued;
  • Sixth , cash payment is important for certain social groups because it is widely accepted, it is quick and facilitates control over payer's spending, settles an operation instantly, and is the only method of central bank money settlement and value. nominal, has no costs for its use, does not require a functional technical infrastructure with the related investments and is always available;
  • Seventh , large cash payments expose themselves to the danger of money laundering and terrorist financing, but for entities that trade goods and are required to carry out customer verification measures, the limit can be raised to € 10,000.

Important what is summarized in the letter of 14 December 2020:

  • The ECB would like to remind you that under the Treaty on the Functioning of the European Union, 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, favoring an effective allocation of resources;
  • The ESCB has the key task of promoting the smooth functioning of payment systems and the ECB has the exclusive right to authorize the issuance of euro banknotes within the Union;
  • Euro banknotes issued by the ECB and national central banks in the euro area are the only ones that are legal tender in the euro area.

It should be noted that the only exclusive right of the ECB is the issuance of euro banknotes, on all other euro payment systems its opinion is only consultative, as shown by these letters and the consequences they have produced in Italy.

As we have always highlighted and demonstrated, monetary sovereignty belongs to the Italian state, which is the only one that can decide on monetary issues, with the sole exception of euro banknotes.

Because THEY won't give up easily, but WE WILL NEVER give up.

© Fabio Conditi – President of the Positive Money Association

http://monetapositiva.it/

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The article The ECB beats the Government on cash comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-bce-bacchetta-il-governo-sui-contanti/ on Mon, 15 Feb 2021 12:28:33 +0000.