Malta Is EU’s Cash Capital

A European Central Bank report analyzing the use of cash, cards and other payment methods used in the euroland economies in 2016 showed Malta is the cash capital of the EU, topping the list of countries where most transactions are effected directly in cash.

According to the detailed study, 92% of all transactions in Malta were made in cash, bypassing any use of electronic or banking system, which would leave an audit trail. The EU average for cash transactions in 2016 was 79%, MNA reported.

The ECB said that cash transactions in Malta constituted 74% of the total value of transactions in the Maltese economy that year. The figure was 54% for the EU.

Although Malta tops the list of cash-dependent economies, other southern member states follow closely, with the Greeks and Cypriots paying in cash in 88% of their transactions and Italians paying cash in 87% of theirs.

On the other hand, the study shows that northern European countries are less dependent on cash, with the Netherlands having the fewest cash transactions, with just 45%.

Although the ECB’s study did not delve into the reasons that southern member states were still more dependent on cash transactions despite easily accessible electronic banking payment services, leading economists who spoke to this newspaper said that one of the main reasons is “rampant tax evasion”.

“The degree of cash payments is usually tied to the level of the hidden economy in a particular country. The more cash payments, the bigger the share of the hidden economy,” one economist said.

“There are other reasons, particularly the level of liquidity in the country, which may also pose problems of inflation. But normally it’s all about tax evasion,” he said.