The end of cash? Swiss Federal Council wants to secure its access with the constitution

The Federal Council of Switzerland wants to secure the accessibility of cash by including it in the constitution.

Swiss Franc banknotes
Swiss Franc banknotes | © Claudio Schwarz

The Federal Council of Switzerland, the seven members serving as collective head of state and government of the country, wants to create a project to secure the accessibility of cash in the Swiss constitution.

The project echoes the popular initiative “Cash is more freedom” launched in 2021 and filed in February. Popular initiatives are citizen-led proposals to change the constitution, which can be voted on during a referendum if they collect 100,000 signatures, 1.2% of Switzerland’s population, in 18 months.

The initiative requested that banknotes and coins be available with sufficient supply and that any project to replace the Swiss Franc be sent for a vote by citizens.

People who built the popular initiative fear digital transactions would make cash disappear.

They consider cash brings more freedom and independence than digital payment systems. Initiators argue cash is easier to use, doesn’t rely on technology, is safer, and is a strong element of Swiss culture.

The “Cash is more freedom” initiative is supported by the Swiss movement for freedom, a Swiss libertarian civil group, anti-vaccine group Freiheits-Trychler, Constitutional Alliance Switzerland, which defends “fundamental rights and self-determination,” and Friends of the Constitution. Friends of the Constitution advocates for direct democracy and was formed in 2020 asking for a referendum against the COVID-19 law allowing authorities to enforce bills urgently, similar to a state of emergency.

On May 17, the Swiss Federal Council acknowledged “the importance, for economy and society, of the role played by cash” and agreed with the initiative.

Federal laws already secure the use of the current Swiss currency, but the council wants to ensure the accessibility of cash in the constitution.

In countries like Sweden, Denmark, the United Kingdom, Ireland, or the Netherlands, digital payments quickly became the majority of transactions and some shops don’t accept cash payments anymore. The euro area also debates the circulation of small denominations like the coins of one and two cents.

Quick decline of the use of cash in Switzerland

In Germany, Austria or Switzerland, the use of cash has been traditionally widespread.

But paying by notes and coins is also on a downward trend in Switzerland, as the Swiss National Bank noticed in a study in 2020.

Cash remains the payment instrument most frequently used by the population in terms of the number of non-recurring payments made.

However, its usage share has dropped significantly compared with 2017. While 70 percent of the payments were still settled in cash in 2017, this share was only 43 percent in 2020.

Cash was used for 45 percent of the non-recurring payments in terms of transaction value in 2017, while it accounted for only 24 percent of the sums paid in 2020. The COVID-19 pandemic accelerated digital payments, and cash is now primarily used for small amounts, less than 20 francs (23 dollars).

The Swiss National Bank also noted that people over 55 and low-income households use more cash than the average. Meanwhile, mobile payment and mobile banking, which don’t favor minted money, are considered helpful in avoiding the financial exclusion of the most vulnerable in some African countries.

Concerned by its decline, voices in Switzerland were raised to protect the use of cash in the country.

A motion in 2020 wanted to write the right to pay in cash in the constitution. But the National Council, Switzerland’s lower house, rejected it in 2022.

In 2018, a postulate from the former national councilor Priska Birrer Heimo, from the Social Democratic Party, aimed to have elected officials to study the strengthening of the right to pay in cash. The National Council adopted it in 2020.

But the Federal Council rejected the idea last September because it could force companies to accept cash payments as part of business contracts, which could infringe on the freedom of contract and induce unfair competition between companies.

This time, the council is in favor of securing access to cash and public consultation in case of a change of national currency in the constitution.

The council felt the popular initiative needed to be more precise and more clearly formulated, so it asked the Federal Department of Finance to build a counter-project by the end of August that would bring the results sought by the popular initiative.

The population would still need to adopt the counter-project in a referendum. But it will probably have more chances to pass as Swiss citizens approve popular initiatives.

Last October, the government of Italy said it wanted to increase the upper limit for cash payments to 10,000 euros, which risked favoring the underground economy and criminal activities, the opposition argued.

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