Abstract
Due to the rising reluctance towards cash because of its inferred connection to criminal activity, a thorough examination of why cash is still the preferred payment option in Germany becomes mandatory. As a result of financial and political uncertainty, cash is still highly demanded as a means of payment, as well as a store of value, although it only plays a minor role regarding transactions involving larger payment amounts.
However, external effects, such as the cohort effect, still need to be reviewed. It is not clear whether the younger generations will use cash as frequently as the older generations.
A substantial argument for abolishing cash seems to be its high costs, but there is no evidence that other payment options are significantly less expensive. Moreover, the high circulation of higher banknotes in other countries creates doubts that an issuance stop of the 500 € banknote will lead to a significant decline in illegal activities. In addition, cashless payment options are also used for tax evasion or the financing of terrorism. Cash allows for data protection and operates as a back-up solution if cashless systems fail.
Lastly, it is of huge importance to analyse the advantages of cash as performed in this chapter before making imprudent assumptions about the declining influence of cash.
All views expressed are those of the author and do not necessarily reflect the position of the Deutsche Bundesbank.
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Notes
- 1.
These figures are derived from the extrapolation of estimates published in Nikolaus Bartzsch, Gerhard Rösl and Franz Seitz, Foreign demand for euro banknotes issued in Germany: estimation using direct approaches, Deutsche Bundesbank Discussion Paper, Series 1: Economic Studies, No 20/2011, and Nikolaus Bartzsch, Gerhard Rösl and and Franz Seitz, Foreign demand for euro banknotes issued in Germany: estimation using indirect approaches, Deutsche Bundesbank Discussion Paper, Series 1: Economic Studies, No 21/2011. See, also, the summary in Deutsche Bundesbank, Foreign demand for euro banknotes issued in Germany, Monthly Report, January 2011, pp. 29–41.
- 2.
See Deutsche Bundesbank (2015), “Payment behaviour in Germany in 2014 – third study of the utilisation of cash and cashless payment instruments ”, Deutsche Bundesbank (2012), “Payment behaviour in Germany in 2011 – an empirical study of the utilisation of cash and cashless payment instruments ”, and Deutsche Bundesbank (2009), “Payment behaviour in Germany—an empirical study of the selection and utilisation of payment instruments in the Federal Republic of Germany”.
- 3.
See Malte Krüger and Franz Seitz (2014), “Costs and benefits of cash and cashless payment instruments – overview and initial estimates”, pp. 57–61, study commissioned by the Deutsche Bundesbank .
- 4.
See Heiko Schmiedel, Gergana Kostova and Wiebe Ruttenberg (2012), The social and private cost of retail payment instruments – a European perspective, ECB Occasional Paper Series 137. The national central banks of the following countries took part in the study: Denmark, Estonia, Finland, Greece, Hungary, Ireland, Italy, Lithuania, the Netherlands, Portugal, Romania, Spain, and Sweden .
- 5.
See Zentraler Kreditausschuss (ZKA): Towards our Single European Cash Area (SECA), The National Cash Plan for Germany, 2004, p. 7.
- 6.
See http://www.wincor-nixdorf.com/static/finanzberichte/2008-2009/q4/de/dasunternehmen/cashcyclemanagement.html, last accessed 22 July 2016.
- 7.
See Ludger Gooßens (2014), “Optimal bezahlen – Wo steht das Bargeld?”, pp. 55–64 in the proceedings of the Deutsche Bundesbank cash symposium 2014.
- 8.
See http://www.derhandel.de/news/finanzen/pages/shop.phd, last accessed 2 February 2012.
- 9.
See Regulation (EU ) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation.
- 10.
See Kai Bussmann (2015), “Dark figure study on the prevalence of money laundering in Germany and the risks of money laundering in individual economic sectors”, Summary, Martin-Luther-University Halle-Wittenberg.
- 11.
For a detailed critical analyse to the Bussmann study, see Friedrich Schneider (2016), “Der Umfang der Geldwäsche in Deutschland und weltweit, Einige Fakten und eine kritische Auseinandersetzung mit der Dunkelfeldstudie von Kai Bussmann”, in: Friedrich Naumann Stiftung, FÜR DIE FREIHEIT.
- 12.
See Friedrich Schneider, in Norbert Häring, Handelsblatt, 2 May 2016, available at: http://www.handelsblatt.com/my/politik/deutschland/geldwaesche-in-deutschland-die-spur-des-geldes/13528054.html
- 13.
See Gabriel Zucman (2015), The Hidden Wealth of Nations, Chicago, September 2015, see http://gabriel-zucman.eu/hidden-wealth, Figure 3 last accessed on 30 January 2017.
- 14.
Thomas Piketty, “Die Schlacht um den Euro”, Libération, 7 December 2010, Munich 2015, p. 85 et seq.
- 15.
See http://www.faz.net/aktuell/wirtschaft/korruption-in-china-bestechung-ohne-bargeld-14088830.html, last accessed 22 July 2016.
- 16.
See, also, a detailed analysis about the impact of the shadow economy by Friedrich Schneider in Chap. 3.
- 17.
See http://www.faz.net/aktuell/wirtschaft/plan-der-bundesregierung-die-bargeld-bremse-sorgt-fuer-streit-14054545.html, last accessed 22 July 2016.
- 18.
See Michel Sapin in: Handelsblatt, 26 January 2016, p. 17.
- 19.
See http://www.reuters.com/article/us-mideast-crisis-financing-france-idUSKBN0U02MZ20151217, last accessed 25 July 2016.
- 20.
See http://www.rbb-online.de/kontraste/ueber_den_tag_hinaus/terrorismus/die-geldquellen-des-is.html, last accessed 19 January 2017.
- 21.
See European Central Bank , The use of euro banknotes – Results of two surveys among households and firms, Monthly Bulletin, April, 2011, p. 85 & 89.
- 22.
- 23.
For a more extensive discussion of these advantages, see Deutsche Bundesbank , Cash as a means of payment and a store of value, Annual report 2015, pp. 25–45.
- 24.
See Kenneth S. Rogoff , “Den Zehner würde ich behalten”, Welt Am Sonntag, 18 September 2016.
- 25.
See Norbert Häring, “Die Abschaffung des Bargeldes und die Folgen. Der Weg in die totale Kontrolle”, Cologne, 2016.
- 26.
See John Cryan, available at: https://www.weforum.org/events/world-economic-forum-annual-meeting-2016/sessions/the-transformation-of-finance-8824a51b-91e1-4f29-88a2-abbfabb5fa8f, last accessed 22 July 2016.
References
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Bartzsch N, Rösl G, Seitz F (2011b) Foreign demand for euro banknotes issued in Germany: estimation using indirect approaches. Deutsche Bundesbank Discussion Paper, Series 1: Economic Studies, No 21/2011
Bussmann K (2015) Dark figure study on the prevalence of money laundering in Germany and the risks of money laundering in individual economic sectors. Summary, Martin-Luther-University Halle-Wittenberg
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Deutsche Bundesbank (2015a) Annual Report 2015. Cash as a means of payment and a store of value, pp 25–45
Deutsche Bundesbank (2015b) Payment behaviour in Germany in 2014 – third study of the utilisation of cash and cashless payment instruments
Deutsche Bundesbank (2012) Payment behaviour in Germany in 2011 – an empirical study of the utilisation of cash and cashless payment instruments
Deutsche Bundesbank (2011) Foreign demand for euro banknotes issued in Germany. Monthly Report, January 2011, 29–41
Deutsche Bundesbank (2009) Payment behaviour in Germany – an empirical study of the selection and utilisation of payment instruments in the Federal Republic of Germany
European Central Bank (2011) Monthly Bulletin April 2011, The use of euro banknotes – results of two surveys among households and firms, April 2011, 75–90
Gooßens L (2014) Optimal bezahlen – Wo steht das Bargeld? 55–64 in the proceedings of the Deutsche Bundesbank cash symposium 2014
Häring N (2016) Die Abschaffung des Bargeldes und die Folgen. Der Weg in die totale Kontrolle, Cologne, 2016
http://www.rbb-online.de/kontraste/ueber_den_tag_hinaus/terrorismus/die-geldquellen-des-is.html. Last accessed 19 Jan 2017
http://www.wincor-nixdorf.com/static/finanzberichte/2008-2009/q4/de/dasunternehmen/cashcyclemanagement.html. Last accessed 22 July 2016
http://www.derhandel.de/news/finanzen/pages/shop.phd. Last accessed 2 Feb 2012
http://www.faz.net/aktuell/wirtschaft/korruption-in-china-bestechung-ohne-bargeld-14088830.html. Last accessed 22 July 2016
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http://www.reuters.com/article/us-mideast-crisis-financing-france-idUSKBN0U02MZ20151217. Last accessed 25 July 2016
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Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation
Rogoff K (2016) Den Zehner würde ich behalten. Welt Am Sonntag, 18 Sept 2016
Sapin M (2016) Handelsblatt, 26 Jan, 17
Schmiedel H, Kostova G, Ruttenberg W (2012) The social and private cost of retail payment instruments – a European perspective, ECB Occasional Paper Series 137. The national central banks of the following countries took part in the study: Denmark, Estonia, Finland, Greece, Hungary, Ireland, Italy, Lithuania, the Netherlands, Portugal, Romania, Spain, and Sweden
Schneider et al (2015) Shadow economy and tax evasion in the EU. p 45
Schneider F (2016a) Norbert Häring, Handelsblatt, 2 May 2016, http://www.handelsblatt.com/my/politik/deutschland/geldwaesche-in-deutschland-die-spur-des-geldes/13528054.html
Schneider F (2016b) Der Umfang der Geldwäsche in Deutschland und weltweit, Einige Fakten und eine kritische Auseinandersetzung mit der Dunkelfeldstudie von Kai Bussmann, in: Friedrich Naumann Stiftung, FÜR DIE FREIHEIT
Zentraler Kreditausschuss (ZKA) (2004) Towards our single European cash area (SECA), The National Cash Plan for Germany
Zucman G (2015) The hidden wealth of nations, Chicago, September 2015, see http://gabriel-zucman.eu/hidden-wealth, Figure 3. Last accessed 30 Jan 2017
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Gladisch, E. (2017). The Use of Cash in Germany: Status and Outlook. In: Rövekamp, F., Bälz, M., Hilpert, H. (eds) Cash in East Asia. Financial and Monetary Policy Studies, vol 44. Springer, Cham. https://doi.org/10.1007/978-3-319-59846-8_9
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