Payment via Cash: Potential Alteration in Habits due to Suggestion by Gérald Darmanin
The Gradual Demise of Cash: Impending Changes in Payment Habits
By Alan Calvez, General News Journalist
In a bid to combat financial crime and illicit activities, cash usage could become a rarity in our daily lives. This proposition has been advocated by Gerald Darmanin, the Minister of Justice, during his Senate inquiry commission on financial crime.
Darmanin urged for the "elimination of cash" as a means to curtail drug trafficking, stating that it provides anonymity to criminal networks, with an estimated €4-€6 billion in transactions each year, with only a tiny fraction seized. However, he clarified that an outright ban on cash is not imminent, acknowledging the need for further discussions and the advantages of cash as a tool for individual freedom.
The Committee Action Publique 2022, a body composed of French public and private sector leaders, parliamentarians, local elected officials, and high-ranking civil servants, previously recommended a gradual reduction in the circulation of cash towards a complete extinction to combat fraud, organized crime, and achieve savings.
The potential disappearance of banknotes is not imminent, but the fate of smaller coins remains uncertain. Some European countries, like the Netherlands, Finland, and Belgium, have already reduced the production of one and two-cent coins, with Ireland completely phasing them out in 2015. France might follow suit, with the Monnaie de Paris planning to decrease the volume of one, two, and five-cent coins by 40% by 2027.
Across the Atlantic, the USA has taken steps towards the disappearance of one-cent coins, with the US Treasury confirming it has placed its last order for these coins, which will no longer be produced starting in 2026. This move was justified by former President Donald Trump, who stated that the production cost of these coins outweighed their value.
While the European Commission's stance on small coins remains pending, the European Central Bank (ECB) launched a virtual currency project in 2021: the digital euro. This digital currency will function like cash but can be used online or via smartphone. It will not replace cash but serve as an supplement. The ECB submitted a proposal for a regulation establishing the digital euro to the European Parliament and the Council of the European Union in June 2023, and an experimental phase is currently underway. The digital euro is anticipated to launch in November 2025, pending a legal green light.
On a related note, the development of the digital euro is intended to provide a secure, universally accepted digital payment option for European consumers. The ECB is collaborating with the private sector, developing infrastructure, and conducting public consultations to ensure that the digital euro meets the needs of European citizens. The digital euro aims to complement, not replace, cash and banknotes, reduce Europe's dependence on foreign payment providers, and promote innovation. It will be pseudonymous, ensuring transactions are not directly linked to personal identities, and it will not allow government surveillance of transactions.
Labeling the shift: The gradual demise of cash is now a label for the changing financial landscape, as various countries and institutions, such as the European Central Bank (ECB) with its digital euro project, are advocating for the reduction of cash usage and the introduction of digital currency options.
Business implications: In light of these changes, the business landscape will need to adapt and innovate to accommodate these new digital payment methods, ensuring that they meet the needs of European citizens while maintaining privacy and security, as well as fostering technological advancement.
