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The cash ceiling: why the government wants to raise it and how it works in Europe

Among the economic measures that the new Meloni government has put at the top of its agenda is the modification of the ceiling for the use of cash. If the current rule sets it at €2,000 and requires the use of tracked electronic payments for any higher amount of spending, the executive would like to increase it to €10,000.

The cash ceiling in Italy: how it has changed

It is a testament of the League, which has presented a draft law for this purpose, first signed by Senator Bagnai, also confirmed by the Prime Minister in his reply speech in the Senate. The issue has already been addressed several times in recent years:

  • IN 2011with the Save Italy decree launched by the Monti government, the cash ceiling was set at One thousand euros;
  • IN 2016the stability law of the Renzi government led him 3 thousand euros;
  • IN 2020with the budget law, it was decided to regulate a 2 thousand euros and then lower further a One thousand euros from January 1, 2022;
  • IN 2022a modification at Milleproroghe had caused the roof drop to be postponed to 1 January 2023.

If the Carroccio bill passes, as it appears, the final rule will not go into effect. Indeed, it could be replaced by another one that would increase the limit of banknote usage by five times (although it is more likely that in this case a gradual increase will be made).

Cash (Pixabay)

The cash ceiling: the situation in Europe

What happens in other European countries? According to data collected by the European Network of Consumer Centers, at the beginning of 2021 only 12 out of 30 countries (including the United Kingdom, Norway and Iceland) had a limit on the use of cash:

  • Belgium: 3 thousand euros
  • Spain: €2,500 for residents and €15,000 for non-residents
  • Portugal: one thousand euros
  • Greece: 500 euros
  • France: one thousand euros for residents and 15 thousand for non-residents
  • Bulgaria: 5100 euros
  • Romania: there is a daily threshold of €2,100
  • Slovakia: 5 thousand euros
  • Czech Republic: 14 thousand euros
  • Poland: 15 thousand euros
  • Croatia: 15 thousand euros
  • Italy: 2 thousand euros

Among the states that do not have restrictions is that Germanywhere those who pay over 10,000 euros in cash must show an identity document, Denmarkwhere merchants can decide to accept cash payments only up to €2500, i Netherlandswhere there is an obligation to report suspicious transactions of an amount exceeding 2 thousand euros and Swedenwhere a merchant can refuse any cash payment.

Why the government wants to raise it and what the ECB said

The motivation behind wanting to raise the roof is to “favor common sense and have less red tape and more freedom”. Giorgia Meloni, in her speech at Palazzo Madama, actually underlined that private electronic money “penalizes the poorest, as was also the result of the left-wing calls from the ECB”.

In 2019, European Central Bank he had actually sent a letter to the Presidents of the House and Senate and to then-Economy Minister Roberto Gualtieri noting that the limit on the use of cash could set difficulties that part of the population that does not have a current account or other electronic means to settle payments – and remembering that cash is the only payment method that does not impose fees for its use. Finally, the body had asked Italy to “demonstrate that the restrictions allowed, in fact, the achievement of the publicly stated goal of the fight against fiscal evasion».

Cash (Pixabay)

Bankitalia position

The fight against tax evasion is actually one of the motives of the proponents of lowering the roof. Analyzing the situations of different European countries, with or without a border, there does not seem to be a direct connection between the two factors. However, in the study Pecunia olet: the use of cash and the underground economy published in 2021 by Bank of Italy, it is pointed out that a 1% increase in cash transactions can translate into an increase of between 0.8% and 1.8% in the shadow economy. While admitting that there are few scientific studies able to show that the cash limit can limit the shadow economy, the researchers estimated that its increase from 1,000 to 3,000 introduced in 2016 would have helped the growth transactions unknown to tax authorities.


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