By Don Quijones, of Spain, UK, and Mexico, and an editor at Wolf Street. Originally published at Wolf Street
The EU’s Orwellian-dubbed Civil Liberties and Economic Affairs committee has approved tough new rules on cash that travelers might bring into or take out of the bloc. It’s also broadened the definition of cash to include precious stones and metals and prepaid credit cards.
For the moment the new definition does not include Bitcoin and other cryptocurrencies, for one simple reason: “customs authorities lack the resources to monitor them.”
Most importantly, the draft law will enable authorities to impound “cash” below the traditional €10,000 threshold, if criminal activity is suspected. The new rules would repeal the First Cash Control Regulation (CCR) from 2005, which requires individuals to declare sums over €10,000 when leaving or entering the EU.
The draft law still needs to be approved by the European Parliament. Then the legislation needs to be negotiated with EU governments. If the law is passed, anyone acting suspiciously carrying any amount of cash, whether in notes, precious stones, precious metals or prepaid credit cards, could face having their “money” impounded.
“Large sums of cash, be it banknotes or gold bullion, are often used for criminal activities such as money laundering or terrorist financing,” said Mady Delvaux, the Committee’s co-rapporteur. “With this legislation, we give our authorities the tools they need to improve their fight against those crimes.”
It could be argued that any legislation aimed at disrupting criminal financial networks is, de facto, a welcome move, but that would ignore the fact that many forms of modern-day tax evasion, avoidance and money laundering are conducted without cash through shell corporations located across multiple jurisdictions, including Luxembourg.
But the EU’s anti-cash measures are not aimed at the giant corporations and well-heeled individuals and families, including those that, thanks to their armies of professional lawyers and accountants, get to exploit the loopholes built into the system to stash their wealth far from the prying eyes of European tax authorities. No, the measures are aimed at average Joes and ordinary Janes, and the main objective is to further dampen their ability or willingness to use or carry cash.
This has long been a cherished goal of the EU, which began 2017 by announcing its intention to “explore the relevance of potential upper limits to cash payments,” with a view to implementing cross-regional measures in 2018. Any attempt by the European Commission to set a mandatory continent-wide limit is likely to be met with fierce resistance — at least in countries where cash is still revered, like Germany and Austria. Others are already so far down the path toward a cashless society that they’ll barely notice the difference.
Besides fighting crime and tax evasion, there are myriad other reasons why the EU and the ECB, along with banks, fin tech firms, credit card companies, national governments and UN agencies, want to pull the plug on physical currency:
- Cash has no middleman. One party pays the other party in mutually accepted currency and not a single intermediary (i.e. bank, fin tech firm or credit card company) gets to wet its beak.
- Increased technocratic control. In a world where every transaction must be electronic (i.e. traceable) and where biometric authentication systems have become the norm, the power of banks, corporations, tech firms, and governments over people’s every-day lives would be virtually unlimited.
- The death of financial privacy. Fyodor Dostoyevsky wrote in 19th century-Russia that “money is coined freedom.” Today, it is one of the last remaining things that gives people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives. However, according to the European Commission’s own rulings, privacy and anonymity do not constitute “fundamental” human rights.
- Cash sets a limit on central banks’ monetary experimentation. During this age of out-of-control financial repression, as long as cash exists, there’s no way of preventing depositors from doing the logical thing – i.e. yanking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it. If cash were abolished, just about any fiscal or monetary policy would be enforceable, at least in the short run.
At the same time, the EU hopes to pass a law that will effectively render the act of carrying reasonably large sums of cash — say, anything above €1,000 — across borders enough to get it confiscated. The writing is on the wall, and it’s written in bright, bold letters. By Don Quijones.
War on Cash bogs down, despite best efforts of government, banks, and credit card companies. Read… Spain’s Third Biggest Bank Just Made it Harder to Get Cash