The European Commission has adopted a recommendation on the legal tender of the euro banknotes and coins. Although euro-area Member States share a single currency, interpretations of what its legal tender status means may still differ across countries, depending on Member States’ pre-euro legal traditions. This recommendation clarifies the scope and effects of the legal tender of euro cash in the euro area. It gives useful guiding on many practical questions related to payments with euro banknotes and coins, for example that payments in cash, including high denomination banknotes, should, in principle, not be refused by retailers or that payments with banknotes and coins should not be surcharged.
Economic and Monetary Affairs Commissioner Olli Rehn said: “This recommendation brings practical benefits for European citizens in their everyday life. It is a matter of consumer rights that payments in cash should, as a rule, be always accepted in shops”.
The purpose of the recommendation on the scope and effects of legal tender of euro banknotes and coins is to define common guiding principles. Since 2002 and the introduction of the euro as a physical currency, the status of legal tender of euro banknotes and coins is not anymore laid down in national legislation but in European Union law. The legal tender status of euro banknotes is laid down in the Treaty on the Functioning of the European Union. In addition, the Council regulation 974/98 of 3 May 1998 on the adoption of the euro contains basic elements on the legal tender of euro banknotes and coins. Beyond these basic principles, the scope and effects of the legal tender of euro cash are de facto still regulated within the various national contexts.
The recommendation is a result of extensive consultations of Member States’ experts in 2009 within an ad-hoc working group – the Euro Legal Tender Experts Group (ELTEG). The group was co-chaired by the Commission and the European Central Bank, and gathered representatives of Ministries of Finance and National Central Banks of all euro area-Member States.
The recommendation lays down ten guiding principles:
- The concept of legal tender should rely on three main elements: a mandatory acceptance of banknotes and coins, for their full face value, with a power to discharge debts.
- The acceptance of payments in cash should be the rule: a refusal is only possible if grounded on reasons related to the ‘good faith’ principle(for example, if the retailer does not have enough change).
- Similarly, the acceptance of high denomination banknotes should also be the rule.
- No surcharges should be imposed on payments in cash.
- Member States should refrain from adopting new rounding rules to the nearest five cent.
- Member States should take all appropriate measures to prevent euro collector coins from being used as means of payments.
- Stained banknotes should be brought back to the National Central Banks as they might be the product of a theft.
- Total destruction of banknotes and coins by individuals in small quantities should not be prohibited.
- Mutilation of banknotes and coins for artistic purposes should be tolerated.
- The competence to destroy fit euro coins should not belong to national authorities in isolation anymore.
Draft Commission Recommendation on the scope and effects of legal tender of euro banknotes and coins
Legal tender of the euro: Commission recommendation - briefing
