Opinion of the European Central Bank of 7 March 2024 on requiring credit institutions to provide a minimum cash infrastructure (CON/2024/8)
OPINION OF THE EUROPEAN CENTRAL BANK of 07 March 2024 on requiring credit institutions to provide a minimum cash infrastructure (CON/2024/8) Introduction and legal basis
On 26 January 2024 the European Central Bank (ECB) received a request from the Dutch Minister for Finance for an opinion on the Law on 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 first, second and third indents of Article 2(1) of Council Decision 98/415/EC , as the draft law relates to currency matters, means of payment and De Nederlandsche Bank (DNB). 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 overall purpose of the draft law is to ensure an adequate level of access to cash services, comprising facilities for both withdrawals and deposits of euro banknotes and coins, throughout the Netherlands by requiring credit institutions with a certain number of account holders to provide a basic cash infrastructure and imposing requirements relating to cash transport services. 1.2 Under the draft law, credit institutions with more than three million payment account holders in the Netherlands are collectively required to ensure the maintenance of a basic cash infrastructure consisting of nationwide and adequate facilities for the withdrawal and deposit of euro banknotes and coins, and to enable their payment account holders to make use of that basic cash infrastructure. Further rules will be laid down on the services that make up the basic cash infrastructure and the requirements to be imposed upon it. The basic cash infrastructure will be accessible to other credit institutions on fair, reasonable and non-discriminatory terms and rates. Credit institutions with more than fifty thousand payment account holders in the Netherlands are required to allow their payment account holders in the Netherlands to make use of the services that make up the basic cash infrastructure for the withdrawal and deposit of euro banknotes and coins.
1 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). 1.3 Directive 2014/92/EU of the European Parliament and of the Council has been duly transposed into Dutch law . The draft law applies to payment accounts within the meaning of Directive 2014/92/EU and Directive (EU) 2015/2366 of the European Parliament and of the Council . Credit institutions that provide payment accounts within the meaning of Directive 2014/92/EU are already required to provide for the withdrawal of funds to consumers. The draft law seeks to further address the adequacy of the provision of cash withdrawal services to consumers as well as cash deposit services to non-consumers. 1.4 The explanatory memorandum accompanying the draft law notes that although the use of cash in the Netherlands has decreased, cash is important for the proper functioning of payment systems and performs a number of important societal functions. For example, significant groups in society depend on the use of cash because they struggle with electronic forms of payment. Such groups include, for example, people with visual, cognitive or mobile impairments, and seniors. In addition, there are various other groups of people who may prefer to pay in cash, including those who wish to budget more easily, those in education and those who wish to pay anonymously. The explanatory memorandum also notes that cash is, for the time being, the main fallback option in case of disruptions in electronic payments. It also states that cash is the only form of public money and contributes to trust in the wider financial system. 1.5 To achieve its objective of allowing reasonable access to cash, rules on the applicable tariffs are to be adopted, and rules on the applicable conditions may be adopted, in relation to use of the basic cash infrastructure. The tariffs for payment account holders may be set to zero. 1.6 The explanatory memorandum identifies a weakness in the cash infrastructure, which is the dependency on a limited number of companies involved in the transport and processing of cash. To address this risk, the draft law empowers DNB to monitor the continuity of service relating to the transport of cash. As a consequence, designated cash transport companies are required to inform DNB in the event of a material change in their service or in the event that they file for bankruptcy. Cash transport companies are also required to have a resolution plan in place. 1.7 DNB is empowered to enforce the draft law by imposing either an order subject to penalty or an administrative fine on the credit institutions and cash transport companies under the scope of the draft law. 1.8 According to the explanatory memorandum, DNB will not be reimbursed for costs incurred under the draft law. The explanatory memorandum also states that the financing of the DNB’s tasks under the draft law is in line with the prohibition of monetary financing and the DNB’s financial independence under Articles 123 and 130 of the Treaty.
2 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).
3 Wet van 28 september 2006, houdende regels met betrekking tot de financiële markten en het toezicht daarop (Wet op het financieel toezicht) (Stb. 2006,475).
4 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).
5 Article 3:267m(1) of the draft law.
6 Article 3:267m(2) of the draft law. 1.9 Finally, the explanatory memorandum notes the relevance to the draft law of the recent Commission proposal for a regulation on the legal tender status of euro banknotes and coins , in particular as concerns the obligation of Member States to ensure sufficient and effective access to cash on their territory and the remedial measures to be taken by a Member State if such access is not sufficiently and effectively guaranteed.
2. Observations
2.1 The ECB understands that electronic payment instruments are increasingly used as the preferred method of payment in the Netherlands, while the use of cash is declining. Despite the digitalisation of the Union economy and the increasing use of electronic means of payment, cash continues to play an important role in society . Cash is a well-established and secure means of payment providing for immediate settlement of debts and direct control over the payer’s spending. It is currently the only payment instrument that allows citizens to settle a transaction in central bank money which is also settled instantly, while, importantly, ensuring privacy . 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, thus ensuring freedom of choice as to method of payment for all citizens . The ECB notes that cash could play an important role in the event of a disturbance in the payment systems, even though cash machines and other service points may also be affected as these are dependent on interaction with the account holding institutions. Furthermore, 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 means of payment, or who do not have access to bank services and electronic means of payments. These groups include disabled citizens, immigrants, socially vulnerable citizens, elderly people, minors and others with limited or no access to digital payment services . 2.2 Notwithstanding that the ECB holds a positive view of further innovation and development in the field of electronic payment instruments, the ECB also welcomes the core objectives of the draft law to facilitate the continued use of cash in Dutch society by ensuring an adequate level of access to cash services throughout the Netherlands. The availability and accessibility of cash and its fallback function in case of disruptions contribute to trust into the financial system, which is important for the smooth functioning of monetary policy.
7 COM(2023) 364 final.
8 See, for example, paragraphs 2.4 and 2.7 of Opinion CON/2019/46, paragraphs 2.1 and 2.2 of Opinion CON/2021/18, paragraph 4.7 of Opinion CON/2022/5 of the European Central Bank of 16 February 2022 on a proposal for a directive and a regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ C 210, 25.5.2022, p. 15) and paragraph 1.7 of Opinion CON/2023/31 of the European Central Bank of 13 October 2023 on a proposal for a regulation on the legal tender of euro banknotes and coins (OJ C, C/2023/1355, 1.12.2023). The ECB has stated its neutrality regarding different means of payment, which means that it does not favour one instrument over another. See paragraph 2.1 of Opinion CON/2015/55. All ECB opinions are published on EUR-Lex.
9 See paragraph 2.1 of Opinion CON/2023/13, paragraph 2.3 of Opinion CON/2023/25, paragraph 2.1 of Opinion CON/2023/39, paragraph 2.2.1 of Opinion CON/2023/40, paragraph 2.1 of Opinion CON/2024/1 and paragraph 2.1 of Opinion CON/2024/3.
10 See Opinions CON/2017/8, CON/2017/40, CON/2019/4, CON/2019/41 and CON/2024/3.
11 See paragraph 2.1 of Opinion CON/2023/39, paragraph 2.2.1 of Opinion CON/2023/40, paragraph 2.1 of Opinion CON/2024/1 and paragraph 2.1 of Opinion CON/2024/3. 2.3 The ECB considers it important that all Member States take appropriate measures to ensure that credit institutions and branches operating within their territories provide adequate access to cash services, in order to facilitate the continued use of cash . Sufficient and effective access to cash is necessary to preserve the effectiveness of the legal tender status of cash. If citizens do not have easy access to cash, they will not be able to use it as a means of payment . 2.4 The ECB welcomes the orders subject to penalty and administrative fines that may be imposed on credit institutions and cash transport companies under the draft law, which should facilitate the enforcement of their collective obligations under the draft law. 2.5 The ECB notes that the role assigned to DNB under the draft law does not raise concerns of compatibility with the prohibition of monetary financing and central bank independence requirements under Articles 123 and 130 of the Treaty. 2.6 The draft law seems aligned with the Commission proposal for a regulation on the legal tender status of euro banknotes and coins, which includes the obligation for Member States to ensure sufficient and effective access to cash throughout their territory. The imposition in the draft law of new obligations on credit institutions and cash transport companies, as specialised service providers for credit institutions, will contribute to ensuring that cash remains available in the Netherlands. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 07 March 2024. [signed] The President of the ECB Christine LAGARDE
12 See paragraph 2.2 of Opinion CON/2020/21, paragraph 3.3 of Opinion CON/2022/40 and paragraph 2.3 of Opinion CON/2024/3.
13 See paragraph 2.2 of Opinion CON/2023/25, paragraph 1.2 of Opinion CON/2023/31 and paragraph 2.2 of Opinion CON/2024/3. See also Principle 6 of ELTEG III in the Final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022, available on the Commission’s website at www.ec.europa.eu.