NBS against imposing only cashless payments

The National Bank of Serbia (NBS) is expressly against the initiative and analysis in which proposals are made for additional restrictions and a ban on the use of cash in payment because it believes that cash payments will decrease when cashless instruments and infrastructure at points of sale have “reasonable costs, acceptable for all retailers in Serbia”.

In a statement, the NBS indicated that restrictions on cash operations have already been prescribed in Serbia, which are harmonized with similar restrictions in the EU and are implemented to prevent money laundering and terrorist financing.

“Beyond those limitations, the artificial abolition of cash payments would only mean the impoverishment of the national economy and would benefit only certain, mostly international private companies. The disincentive for the use of cash can only be thought of in such a way that cashless payments should be cost-effective and practical to use in order to replace cash,” the NBS stated.

The NBS also says that the majority of retailers who refuse a customer who wants to pay something via a credit card, do so because the use of cashless payment is “often expensive” for the retailer.

“Cashless payment is preferred, but should not be imposed at all costs, but with rather acceptable costs/ Otherwise, in circumstances where not all costs are at the optimal level, retailers will compensate for that by increasing the prices of goods and services… When making any analyzes and proposals related to cashless payments, as with all economic activities, one should therefore always analyse the costs that would, directly and indirectly, arise from it”, the central bank stated.

The Foundation for Advanced Economics from Belgrade says that Serbia has a significant (negative) gap in terms of the development of a cashless economy with respect to financial inclusion, cashless payment infrastructure and the relative size of cashless transactions in the economy in comparison to other European countries. With around 62 payment cards per 100 inhabitants in 2019, the relative number of payment cards in Serbia in 2019 was lower than the CEE average and the developed Europe average by half and by two-thirds, respectively, which indicates a low degree of financial inclusion. Similarly, with 1,313 POS terminals per 100,000 inhabitants, one-third lower than the CEE average and two-thirds lower than the developed Europe average, Serbia performs relatively modestly in terms of the proliferation and development of cashless payment infrastructure.

The Foundation also says that econometric results for Serbia and EU countries show that an increase in the size of the cashless economy has a statistically significant negative impact on the shadow economy. “Using annual unbalanced panel data on Serbia and 25 EU countries for the period 2000-2019, the relationship between the shadow economy and the cashless economy is estimated econometrically, controlling for the impact of the set of control variables”, the Foundation adds.

(Nova Ekonomija, 11.07.2023)



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