Use it or lose it.
Both institutions have a considerable responsibility with regard to cash. They are committed to raising awareness of the importance of cash in modern society while developing innovative approaches to make it attractive. Their primary goal is to ensure that cash retains its relevance in an increasingly digitalized world. This requires not only communicating these messages, but also creating a positive image for cash to ensure that it does not lose its importance and continues to play a central role in Austrian society.
Why cash is still a smart choice
The benefits of abolishing cash that are often cited in public debate, such as less crime and the black economy or cost savings, turn out to be untenable or false on closer inspection. For example, digital means of payment are currently preferred in the shadow economy. The enormous costs of card payment fraud are often "forgotten" in some published calculations, meaning that cash is by far the most cost-effective means of payment. The overall economic balance speaks in favor of maintaining an efficient cash system.
Cash remains a wise choice for all those who appreciate the advantages of this tried and tested payment method. It is not a question of an either/or policy, but of a both/and policy. Despite partial competition, the overall view is that cash and digital payment methods complement each other. The coexistence of cash and digital alternatives will therefore continue to be preferable to a world without cash in terms of economic policy.
There are good reasons for Austrians' preference for cash:
✚ Privacy: cash makes it possible to conduct financial transactions discreetly and protect personal information. Using cash means that an individual's financial life remains private.✚ Reliability: Unlike digital payment methods, cash is always available. There is no need to worry about dead batteries or technical problems.✚ Financial education: Cash plays an important role in financial education, especially for children. It enables them to learn how to handle money, save and fulfill their own wishes.✚ Financial overview: Cash makes it easier to control spending, in contrast to the complex business models of digital payment methods, which make it more difficult to keep track of finances.✚ Cost efficiency: Cash transactions are cost-effective and do not burden the consumer or the merchant with additional payment service provider fees that can occur with digital payments.✚ Security and independence: Cash is indispensable, especially in times of crisis. It enables secure payments, even if power outages or other disruptions occur.✚ Data protection: Cash transactions are private and offer protection against data misuse. In contrast, digital payments are more susceptible to security breaches and data breaches.✚ Counterfeit protection: Euro cash is considered particularly counterfeit-proof and offers consumers and merchants security in their transactions.
The central banks, such as the Oesterreichische Nationalbank (OeNB), are solely responsible for issuing euro banknotes and coins. The OeNB supervises the issue of banknotes, while Münze Österreich AG, a subsidiary of the OeNB, is responsible for minting the coins. In addition, the central banks implement monetary policy in accordance with the guidelines of the European Central Bank (ECB). The central banks cooperate closely with commercial banks that hold accounts with them. The commercial banks' balances with the central bank and the physical cash are combined as "central bank money" and are only produced by the central bank.
Public money and private money are two different types of currency, with public money being backed by the state and generally accepted, while private money is issued by private companies and relies on trust in these companies. They differ in their origin, status and function:
Origin
Public money is issued and guaranteed by state or public institutions. It is the official legal tender of a country and is managed by the country's central bank. The cash in your wallet is a form of central bank money. At present, banknotes and coins are essentially the only types of central bank money available to the general public. Central bank money is also referred to as public money, as it is issued by a public institution, the central bank, and is therefore backed by the public sector.
Private money is issued by private institutions, usually commercial banks. It is money that is created by private companies and is not guaranteed by public authorities. Credit cards, checks and other means of payment issued by private banks are examples of private money. Commercial banks also contribute to the creation of money, for example when they grant a loan and the corresponding amount is credited to the account. This form of money is referred to as private money. This also includes the credit balances and savings shown on the bank statement. Current payments with debit or credit cards or via online payment services are always private money, as the money created by the bank is used.
Guarantee and security
Public money is issued and guaranteed by state institutions and central banks. Citizens have confidence in public money as it is backed by the government and recognized as legal tender. It offers a high level of security and stability.
Private money is based on trust in the private companies that issue it. It does not have the same government guarantee and security as public money. Trust in private money depends on the reputation of the private institution that issues it.
Function
Public money is primarily used for everyday trade and transactions in the economy. It serves as a generally accepted means of payment and as a reserve currency.
Private money, issued by private institutions such as banks, can take various forms and is often used for electronic transactions, credit card payments and other non-cash payment methods. It often complements public money, but is not usually considered an official currency.
That is, public money is backed and guaranteed by government institutions, offers high security and is used as an official means of payment. Private money, issued by private companies, is based on trust, is often used for electronic transactions and complements public money. Both forms ultimately play an important role in the modern economy and financial system.
The heated debates surrounding cash have left many of us somewhat perplexed: Is cash safe for us, will it even be abolished and who regulates the use and acceptance of cash anyway? The EU, the Austrian parliament or the National Bank?
So much in advance: In other countries, you can no longer pay in cash in some pharmacies, for example in the Netherlands (12% of pharmacies do not allow cash payments) and this worries many people, especially those who are not so financially secure. However, we are a long way from abolishing it.
Use is regulated at EU level, as well as by Austrian legislators, but many lack the "bite" for acceptance. In Prof. Flume's opinion, whether your pharmacist, grocer or landlord wants to and must accept the money could be regulated more clearly, as he tells us in the latest episode of Gerstl & Marie. The clarification is also desirable because the cash infrastructure is eroding faster than people think.
Cash comes in the form of banknotes and coins (i.e. physical tokens of money) and is therefore distinct from book money or scriptural money. In contrast to cash, book money represents the money available in bank accounts. Together with cash, it therefore falls under the general concept of "money", but unlike cash, it does not qualify as legal tender.
According to case law, book money merely represents a claim for the payment of central bank money against the banking company. The claim manifests itself in the crediting of the amount to the customer's account. In contrast to cash, a book money transaction therefore involves a debtor in the form of a bank. To put it bluntly, this is a dematerialization of cash, as book money is basically "merely" a booking line in the system. However, book money has a payment function just like cash and therefore fulfills similar functions from an economic point of view.
Paying with book money therefore does not give the creditor ownership of banknotes or coins, but merely a claim against a credit institution, which can ultimately be converted into cash by withdrawing it from a cashier or ATM. If the credit institution becomes insolvent, account balances of up to € 100,000 per credit institution are covered by the deposit guarantee. However, amounts above this amount are at risk of being reduced or even lost completely, as these are merely insolvency claims (Section 51 IO). In contrast, the recipient can in principle acquire ownership of banknotes and coins as tangible assets within the meaning of Section 285 of the Austrian Civil Code (ABGB) by handing them over (Section 366 ABGB) or by mixing them (Section 371 ABGB). This in turn results in a real and absolute right of the owner.
Finally, cash is characterized by the fact that it is the legal tender recognized by the state and subject to a fundamental acceptance obligation.
The promulgation clause (para. 9) to the ABGB from 1811 contains an initial reference to this:
"In particular, the rights and obligations relating to monetary payments are to be assessed in accordance with [...] the special laws yet to be enacted, and only in the absence of these, in accordance with the general provisions of the Code."
Today, these "special laws" are found primarily at European level and also at national level:
(1) The European Central Bank shall have the exclusive right to authorize the issue of euro banknotes within the Union. The European Central Bank and the national central banks shall have the right to issue such banknotes. The banknotes issued by the European Central Bank and the national central banks shall be the only banknotes that are legal tender in the Union.
(2. Member States shall have the right to issue euro coins, subject to the approval of the European Central Bank. The Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may adopt measures to harmonize the denominations and technical specifications of all coins intended for circulation to the extent necessary to ensure their smooth circulation within the Union.
The ECB has the exclusive right to authorize the issuance of banknotes by the national central banks within the Union - thus it does not have a monopoly on the issuance of euro banknotes, but it does have a monopoly on their approval.
For Austrian law, Section 61 (1) of the Nationalbank Act stipulates that "[t]he Oesterreichische Nationalbank [...] is authorized, subject to the approval of the ECB, to issue banknotes denominated in euro."
However, it is not the ECB that is authorized to issue coins, but only the respective member state. The scope of coin issuance is in turn subject to the approval of the ECB.37) Pursuant to Section 2 of the Coinage Act38) , only Münze Österreich AG (a wholly owned subsidiary of the Oesterreichische Nationalbank) is authorized to mint coins and commercial coins in Austria and to put coins into circulation and collect them.
Like the majority of euro countries, Austrian law does not have a legal definition of a means of payment ("legal tender"). § Section 61 (1) NBG merely repeats that "the banknotes denominated in euro issued by the Oesterreichische Nationalbank, the ECB and the national central banks of the other Member States participating in Stage Three of EMU shall be legal tender".
Similarly, Section 8 (2) ScheidemünzenG states for euro coins that they "shall be legal tender until they are debased".
Finally, Section 1 of the Euro Act43) (EuroG) also states that banknotes denominated in euros issued by the OeNB, the ECB or certain other national central banks, as well as collector coins denominated in euros or cents, are legal tender.
In Austrian law, a basic acceptance obligation is standardized at the simple statutory level in Section 61 (2) NBG and Section 8 (3) ScheidemünzenG. § Section 61 para. 2 NBG stipulates that "[t]he banknotes referred to in para. 1 must be accepted at full face value without restriction, unless the obligation is to be fulfilled in certain means of payment." This means that the creditor of a monetary debt must accept legal tender to fulfill his claim and is in default of acceptance if he refuses the corresponding payment. This includes all euro
banknotes of the euro area, i.e. all banknotes denominated in euro issued by the Oesterreichische Nationalbank, the European Central Bank (ECB) and the national central banks of the other euro countries.
For coins, Section 8 (3) ScheidemünzenG generally provides for a statutory acceptance obligation.
In the absence of any other agreement, the debtor may in any case fulfill his obligation in cash (i.e. by means of euro coins and euro banknotes).
This applies even if the creditor has already notified the debtor of a bank account for the settlement of a non-cash payment. The final exclusion of cash payment therefore requires an agreement to this effect. While the debtor can therefore fulfill his obligation in cash in the absence of any other agreement, a payment with book money, in particular a transfer to a bank account, constitutes a performance in lieu of payment which requires the (implied) consent of the creditor. Even in the new legal situation, payment in cash and transfer to a bank account cannot be regarded as completely equivalent forms of performance, especially as the debtor's right to choose under Section 907a ABGB depends on the creditor disclosing bank account details.55) The debtor therefore only has a genuine right to choose how to settle his debt if the creditor names a bank account for the transfer. The provision therefore basically gives cash priority over book money. This is also supported by the fact that the legislator explicitly strengthens the right of choice in other places for certain legal transactions. For example, according to Section 15 (3) MRG, the landlord must provide the tenant with a bank account for the payment of rent. However, this does not affect the tenant's right to choose whether to pay the rent in cash or by bank transfer.
However, the obligation to accept euro banknotes and coins is subject to various restrictions in certain legal provisions. For example, the Money Laundering Directive63) was issued in 2015, which was implemented nationally in particular in the FM-GwG and in Sections 365m ff GewO. Accordingly, credit and financial institutions, lawyers, notaries and traders, among others, are subject to special obligations for the handling of cash transactions. For example, there are disclosure obligations with regard to the identity of persons, the origin of funds and their use if transactions are carried out with cash that reach or exceed a value of € 10,000 (Section 365o Z 3 GewO) or € 15,000 (Section 5 Z 2 and Section 6 FM-GwG). A further disclosure obligation is provided for in the Cash Regulation64) , which stipulates that travelers entering or leaving the European Union and carrying cash in the amount of € 10,000 or more must report the amount to the customs authorities.
§ Section 48 EStG also stipulates that wage payments for the provision of construction services may not be made as cash payments.
Finally, a look across borders shows that several eurozone member states have already implemented cash payment limits at national level. Of particular note is the cash payment cap in Greece, which is € 50065). The cash payment limit of € 10,000 now planned at EU level, which is intended to lead to a Europe-wide harmonization of national cash payment limits in order to combat money laundering and the black economy, will lead to further restrictions on cash payments.
Finally, the basic obligation to accept cash is also subject to private autonomous disposition. This means that private individuals can contractually decide whether they wish to accept cash or agree on a different form of fulfillment. A distinction must be made between this and the question of whether traders can in principle exclude and refuse to accept cash. In such a case, there would in principle be legal protection options. One possibility would be the review of general terms and conditions (Section 864a and Section 879 (3) ABGB). Here, for example, it would have to be examined whether the corresponding clause is disadvantageous and surprising or whether the contractual partner is grossly disadvantaged by the exclusion of cash payment. It would have to be asked whether the contractual partner had to expect the exclusion of the cash payment option based on the circumstances surrounding the contract and the external appearance. Just think of a used car purchase where the buyer loses the security of the step-by-step principle due to the exclusion of cash payment in the general terms and conditions before handover. It is also important to note that not everyone has a debit or credit card and that these people would therefore not be able to pay by card and would therefore be excluded from participating in social life.
The basic acceptance obligation under Austrian law and the status as a legal means of payment at European level, including "acceptance as a rule", suggest that such an exclusion would often be inadmissible under general civil law regulations and the Supreme Court's case law, or at least highly questionable.
The case law of the ECJ for the public sector also indicates that an exclusion is only possible if it has been negotiated in detail and there is a specific justification for it. The permissibility of an exclusion without any justification would effectively undermine the status of cash as legal tender, which is contrary to the nature of legal tender. In any case, even then there would be no real enforceability for the individual, which is why de lege ferenda a legal clarification would be urgently needed.
Another question to be asked is whether a contractual exclusion of the use of cash, which is permissible in individual cases, applies in all cases or whether it must nevertheless be restricted in certain (exceptional) cases.
If non-cash payment is de facto not possible due to temporary obstacles even before the contract is concluded, cash payment cannot be waived. This follows from the step-by-step principle standardized in Section 1062 ABGB, according to which the buyer is obliged to "take over the item [...] and at the same time pay the purchase price in cash". This
provision is basically dispositive. Deviations from the step-by-step principle require an agreement to this effect between the parties. The transfer or any other form of fulfillment constitutes a performance in lieu of payment, which requires the (at least implied) consent of the creditor (i.e. the recipient of the payment).
However, this consent is simply not possible in such a case due to a lack of technical alternatives. Therefore, in the light of Section 1062 ABGB, an implicit obligation to accept payments in euro cash can be assumed until a cashless payment (and therefore a deviation from the principle of payment of the purchase price in cash) is possible again.
The ECJ states that the status of euro banknotes and coins as legal tender in principle provides for an obligation to accept these banknotes and coins. Methodologically, the ECJ comes to this conclusion by interpreting the literal meaning of Art 128 TFEU and refers to the recommendation of Com 2010/191/EU .83) This precludes, for example, the adoption of a national
This precludes, for example, the adoption of a national provision which has as its object or effect the legal or de facto abolition of euro cash, in particular by undermining the possibility of fulfilling a cash payment obligation with cash. However, the Member States could, within their "own powers", which include the organization of public administration, adopt measures obliging the acceptance of cash or providing for an exemption from the obligation to accept cash.
However, as stated in recital 19 of the euro introduction regulation, a restriction is only permissible for reasons of public interest, provided that these restrictions are proportionate to the public interest objective pursued.
In general, the euro with its status as "legal tender" in the euro states cannot therefore be rejected for the settlement of a debt in this currency. Rather, the acceptance of cash - as the ECJ states in several places - must be possible as a rule. At the same time, however, there does not have to be an absolute obligation to accept euro banknotes in order to anchor and maintain this status. Any exceptions to the obligation to accept cash would also not have to be exhaustively and uniformly defined by the EU legislator.
