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Germans’ love of cash: obsession or pragmatism?

by Viktoria Dijakovic | Feb 13, 2018

dandelion_smallIt’s no secret: Germans love cash, and they express their affinity for it at any occasion that calls for an opinion on payments. This fondness is not synonym for old-fashioned or nostalgic - quite the contrary - as data on Germany’s economy have proven time and again. Numerous researchers have tried to scientifically analyze the cause of this relationship is, but it is hard to point to one specific reason. Explanations go from an appreciation for privacy, to a difficult history with inflation, to a genuine fear of debt, and more.

Regardless of the reasons for this relationship, Germans are the ones behind the existence of the €500 – the Eurozone’s highest denomination banknote that is due to be phased out. They are also the biggest euro issuers of the entire Union, accounting for almost 50% of the €1.1 trillion notes in circulation.

And although Matthew Campbell, author of the Bloomberg article “Germany is still obsessed with cash”, hints at a rising shift in habits in Europe’s economic powerhouse, it remains to be seen how the payments landscape evolves in Germany. While Germans might be starting to adopt cards and mobile payments, this shift does not automatically imply an abandonment of cash. Indeed, Bundesbank President Jens Weidmann confirms that “German citizens value cash very highly, and that’s quite simply a fact” and adds that the German central bank will do all that is necessary to respond to the needs of its citizens.

Also, Germans like their independence, as Member of Parliament Klaus-Peter Willsch states: “[cash] gives you independence from people making monetary policy”; and they also like the anonymity it can offer in daily transactions.

As Campbell notes, these issues might not be of such concern for Germany’s Northern neighbors, the Swedes, who are extremely confident in their government and their payment system. But this attitude could also be a potential sign of Swedish naivety vis-à-vis the authorities, as Bengt Nilervall, a payment expert puts it. So are Germans really obsessed, as suggested by Campbell, or are their simply cautiously pragmatic by choosing to diversify their options, even when that means being frequently scrutinized as the odd duck? It will remain to be seen how the debate and habits evolve over time, but what is certain is that there are certainly greater risks involved when there is no diversification, regardless of the convenience of the payment method.


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