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Can cash payment be limited in a modern payment system?

Author

Listed:
  • Zita Véber

    (Magyar Nemzeti Bank (central bank of Hungary))

  • Judit Brosch

    (Magyar Nemzeti Bank (central bank of Hungary))

Abstract

Is it acceptable that festivals allow payment by festival cards only but not by cash, and that some airlines will sell you flight tickets only if you use your bank card to purchase online? In connection with the interpretation of the legal tender status of banknotes and coins, different views have been voiced in recent years: whether cash or certain denominations of banknotes and coins (large-denomination banknotes, small-denomination coins) can be rejected as means of payment for products or services; whether it is acceptable that a product or service can be paid only through electronic payment instruments, and whether cash surcharges can be applied. In the opinion of the Magyar Nemzeti Bank as the body responsible for the issuance of forint banknotes and coins, the legal tender status of banknotes and coins does not mean their obligatory acceptance for payment under all circumstances. In this article, we provide an overview of the various approaches to the legal tender status and present the technical arguments which we believe support the position of the MNB.

Suggested Citation

  • Zita Véber & Judit Brosch, 2013. "Can cash payment be limited in a modern payment system?," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 8(1), pages 52-61, January.
    • Handle: RePEc:mnb:bullet:v:8:y:2013:i:1:p:52-61
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    File URL: http://www.mnb.hu/letoltes/veber-brosch-1.pdf
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    References listed on IDEAS

    as
    1. Rita Odorán & Balázs Sisak, 2008. "Cash demand of the Hungarian economy – is the shadow economy still running smoothly?," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 3(3), pages 19-25, December.
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      More about this item

      Keywords

      legal tender; cash payments; cashless payments;
      All these keywords.

      JEL classification:

      • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
      • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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