"The 'cashless' economy fights informality" - How can it be reduced? Pocket: Small denominations of lek should be left in circulation
Despite the fact that card payments have increased year by year, about 70% of transactions in the economy are carried out in cash. Almost 2/3 of the total volume of payments on an annual basis is carried out in cash and very little is carried out electronically, said lecturer Selami Xhepa in an interview with Scan Television.
According to him, to move towards an economy less dependent on physical money, the amount of currency denominated in large monetary units must be reduced.
"Europe, for example, has given up issuing the 500 euro banknote and the largest monetary unit is currently 200 euros, so what Albania needs to do is to remove these high-denomination banknotes from circulation and move towards using or issuing only banknotes in small denominations, and this then automatically exerts pressure not to use cash on a massive scale," said Xhepa.
This should be accompanied by the creation of the necessary infrastructure for people to use digital systems for making payments. Regarding being a cashless economy, Xhepa underlined that this is a very ambitious, but effective project in terms of reducing informality.
"It would be an extremely large national action to realize such an ambitious project, but in conditions of high informality, one of the instruments offered in these cases to combat informality in all its dimensions, including the criminal economy, high-level corruption, and so on, is to move towards an economy in which cash is used as little as possible," the professor emphasized, among other things.
Reducing commissions will relieve consumers and the private sector from high levels of fees, he said, but this causes a reduction in profits for the financial system. The final step would be the integration of our payment system with the European payment system Target, which is part of the Eurosystem.
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