In a speech given to the Deutsche Bundesbank, the central bank’s Board Member Carl-Ludwig Thiele made a case for cash. His speech comes at a time where tense discussions are being carried out in the Eurozone in regards to the future of the €500.
According to Thiele, the choice of payment method for everyday transactions is every citizen’s freedom and right. This includes cash. In fact, he considers that each currency – including alternative payment methods – thrive on confidence. Confidence is hard to achieve yet easily lost and Thiele believes that it’s not the government’s role to be suspicious of citizens using large amounts of cash or higher denominations, such as the €500. And better yet, in the absence of any serious study that proves the link between €500-euro notes and criminality, it would be biased to rush to conclusions. Criminals might use cash, but they have also been found using other modes of payment.
The demand for cash has been steadily increasing over the years. In Germany alone, demand has been growing by 6%. Cash is a store of value; cash is fast, easy-to-use, and convenient; cash offers privacy and is accessible to all echelons of the population. Finally, Thiele states, “the future role of cash should solely be determined by the demand for it”, because, in the end, it’s the payment behaviour of businesses and consumers that should guide any future decisions on the availability of cash and not generalised assumptions.
To read Thiele’s full speech [in German], please click here.