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Tuesday 19.03.2019 | Name days: Jāzeps
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Expert: people should get used to cash money being a thing of the past

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe gradual decline of cash transactions is only logical in an age of progressing digitization. On top of that, Latvia is neither the first nor the last country experiencing such processes, says Turība University Business Management Faculty Pro-Dean Ieva Bruksle.

The expert says the world is gradually becoming more digitized and the changes affect monetary transactions.

«I believe more and more such solutions will soon enter our lives, and we have to get used to this. Such changes affect not only Latvia – it is already completely normal for many parts of the world. Moreover, some countries have gone even further. Sweden’s central bank Riksbank plans to commence a pilot project this year to develop electronic currency – a fully functional e-krona. This new currency would be released in circulation if permission is received,» says Bruksle. ‘In recent years Sweden has been gradually reducing use of cash in transactions. Results show that this goal is gradually progressing – credit cards and debit cards are the most common payment methods used in Sweden. Mobile transactions have become almost as popular as cash.’

The pro-dean mentions that by reducing the volume of cash in circulation authorities expand control mechanism capacity, making processes more transparent.

«If we look at amounts on which restrictions have been imposed, I would like to stress that they are not by any means small. The law provides restrictions on cash transactions whose total size exceeds EUR 7,200 regardless if the transaction consists of one or several operations. The ministry has also proposed reducing this amount to EUR 3,000 to better fight grey economy. Additionally, amendments provide the a restriction for private persons not engaged in economic activities to perform real estate and vehicle alienation transactions work more than EUR 1,500,» said Bruksle, adding that as non-cash transactions continue developing in the world, the same could happen in Latvia.

The expert says that some people consider this step bank lobby, because when performing money transfers from one bank to another, clients have to pay commission fee. The pro-dean does not deny that commission fee is a topic for discussion.

«One solution, on having a single state bank to help resolve the commission fee problem, would not be appropriate for market economy, because it would result in loss of competition,» says Bruksle.

«The end of 2008 marked the beginning of a process aimed at improving control over financial transactions. We expect security measures to increase in the future. This legislative draft will have its results. However, it is too soon to say how much it could help fight grey economy. Our society is very creative and I allow that some people might start looking for ways to circumvent restrictions,» said Bruksle.

In February, the Cabinet of Ministers supported Finance Ministry’s prepared amendments to the Law on Taxes and Duties. This legislative draft provides for reducing the number of cash transactions. Amendments may come to force around May. Before that, however, it needs to be supported in the Saeima.


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