A recent legal opinion by Christian Waldhoff of Humboldt University in Berlin analyses the role of cash at the intersection of digitalisation, regulation and the protection of fundamental rights. The study concludes that restrictions on the use of cash do not merely concern economic or fiscal policy issues, but deeply encroach upon the constitutional order. At its core is the thesis that cash fulfils an independent legal and social function that cannot yet be fully substituted by alternative means of payment.

Cash as an expression of individual freedom

The expert opinion clearly places the choice of payment method within the scope of protection afforded by private autonomy. This is constitutionally guaranteed as part of the general freedom of action and freedom of contract. The ability to choose freely between cash and non-cash forms of payment is thus not merely a practical option, but an expression of individual freedom of choice in economic life.

Any restriction on this freedom of choice – such as a general ban on cash – consequently constitutes an infringement of fundamental rights. This affects not only consumers but also businesses, whose economic activities are likewise protected by the freedom to pursue a profession. Added to this is the guarantee of property rights: cash is not only a means of payment but also an asset, the use of which may not be restricted arbitrarily.

Data protection as a structural differentiating factor

A central argument of the expert opinion lies in the data protection dimension of payment transactions. Whilst cash transactions can in principle be carried out anonymously, this is structurally impossible with digital payment methods. Every electronic payment generates data trails that allow conclusions to be drawn about behaviour, preferences and economic circumstances.

This systematic data collection affects not only individual transactions but also enables – when aggregated appropriately – the creation of comprehensive personal profiles. In this context, the fundamental right to informational self-determination takes on considerable significance. The state is therefore obliged to create framework conditions that also allow for data-minimal forms of payment.

However, with advancing digitalisation, the risk of a creeping displacement of cash-based transactions is increasing. This would inevitably lead to a concentration of personal data and expand the scope of fundamental rights protection – a circumstance that significantly raises the bar for regulatory intervention.

EU legal framework and obligation to accept

At EU level, cash – in particular euro banknotes – is defined as the sole legal tender. This classification has direct legal consequences: it fundamentally implies an obligation to accept cash in payment transactions.

The European Court of Justice has clarified in its case law that restrictions on this obligation to accept payment are permissible only under strict conditions. They must serve a legitimate public interest and be proportionate. Furthermore, the status of cash must not be effectively undermined by an accumulation of individual measures.

This makes it clear that regulatory interventions must not be considered in isolation. Rather, their overall impact on the payment system is decisive.

Cash infrastructure as part of public services

The expert opinion goes beyond a purely individual legal perspective and places cash within a systemic context. The supply of cash is classified as part of the state’s public services and, at the same time, as critical infrastructure.

This classification has far-reaching consequences. The state bears a so-called guarantee responsibility, which obliges it to ensure the continued functionality of this infrastructure. This encompasses not only the physical availability of cash, but also the maintenance of acceptance points and logistical structures.

This aspect becomes particularly relevant in crisis situations. In the event of digital system failures – for example, due to cyberattacks, power cuts or technical malfunctions – cash acts as a stabilising fallback mechanism. A weakening of this infrastructure could therefore generate systemic risks for the economy as a whole.

Proportionality and regulatory limits

A key finding of the report is that cash restrictions are subject to high standards of proportionality. This applies in particular to:

• the empirical justification for regulatory measures
• the precision of the interventions
• the balance between the intensity of the intervention and the intended benefits

It is critically emphasised that many arguments in favour of cash restrictions – for example in the area of crime prevention – are not sufficiently robust from an empirical perspective. At the same time, such measures regularly affect the entire population, even though problematic usage scenarios account for only a small proportion.

This discrepancy leads to a significant broadening of the scope of intervention and calls into question the appropriateness of such measures.

Social participation and consumer protection

In addition to traditional fundamental rights, the report emphasises the social dimension of cash. It enables non-discriminatory access to payment services, as no technical requirements, contractual obligations or credit checks are necessary.

Cash is therefore of particular importance for certain sections of the population:

• older people with limited digital literacy
• people without a bank account
• children and young people
• People in structurally disadvantaged regions

Restricting the use of cash in these cases can lead to de facto exclusion and thus raises questions of social justice.

Arguments for and against restricting cash

Advantages

• Increased efficiency in payment transactions
• Better traceability of transactions
• Potential reduction in certain forms of crime
• Simplification of administrative processes
• Integration into digital business models

Disadvantages

• Interference with personal autonomy and freedom of choice
• Loss of data protection and anonymity
• Dependence on private payment service providers
• Risks in the event of system failures (lack of resilience)
• Disadvantage to vulnerable population groups
• Risk of comprehensive behavioural and movement profiling

Commentary: Between the logic of efficiency and the protection of fundamental rights

The debate on the future of cash is less a technological issue than a regulatory one. Digital payment systems are undoubtedly more efficient and better integrated into modern value chains. Nevertheless, the expert report shows that these efficiency gains cannot be realised without costs to fundamental rights.

Particularly relevant here is the structural asymmetry between cash and digital payment methods: whilst cash operates with minimal data usage and is system-independent, digital systems are inevitably data-intensive and infrastructure-dependent. These differences cannot be completely levelled out.

Against this backdrop, a complete or near-complete replacement of cash appears neither legally tenable nor systemically sensible. Rather, a hybrid model is emerging as a sustainable solution, in which both forms of payment coexist and complement each other functionally.

The concept of payment method neutrality is gaining significance in this context. It offers a regulatory framework that takes into account both technological innovation and the protection of fundamental rights. The decisive factor will be whether this balance can be secured in the long term – particularly against the backdrop of increasing digitalisation and economic interests in data-driven business models.