Main – Cash is still very popular in Germany. Payment by card or smartphone app is rare in comparison. While Sweden and Denmark are radically digitizing their payments, people in Germany are still paying in cash: on three out of five occasions (79 percent of transactions), as the Bundesbank has calculated on the basis of 2014 data. Over half (53 percent) of retail sales are made in cash. Nevertheless, some economists would like to abolish the cash. What are the pros and cons?
Expenditure control: Cash payer feel they have a better grip on their expenses. If the 103 euros spent by the people according to the latest Federal Bank survey, on average, in the purse, the hurdle to further purchases is higher. One in five, who pay only in cash, stated in the Bundesbank survey that it was just nice to find bills in their hands.
Anonymity: If you pay with a bill and a coin, you will not leave any electronic traces at the till. Maybe the spouse should not be able to understand on the common account, what a gift has cost? And even some dark business should not come to light. Cash payments protect privacy, Bundesbank board member Carl-Ludwig Thiele argues: “The fact that even less righteous people benefit from this is no reason to make honest citizens more and more transparent.”
Data protection: The concern about the seizure of sensitive bank data in the use of plastic money is great – even if the latest figures on “skimming” should actually provide reassurance: The spying of card data and PIN (PIN) at ATMs in Germany has been declining for years. From January to the end of November 2015, criminals manipulated 111 vending machines nationwide – much less than in the previous year. Accordingly, criminals no longer bother with payment terminals in the shops.
Value preservation: Europe’s central banks have so far issued banknotes worth more than one trillion euros. But only 15 percent of them are used for transactions. The majority is hoarded – true to the motto: “Only cash is true”.
Donations: What would be the donation box on the shopping mile, the collection box in the church or the hat of the homeless person without pretense and coin? Even at street vendors and flea markets electronic means of payment – be it debit card, credit card or mobile by mobile phone – hardly conceivable. In some churches already the “electronic bell bag” can be filled: The money is transferred, the donor gets a certificate for the tax office.
World Savings Day: What will become of the World Savings Day, when there is no more cash? Since 1925, the day is supposed to encourage people to save each year on the last working day in October. Piggy banks would be redundant in a cashless society – and to make children fit for the abstract topic of finances would be much harder.
Contrary to cash
Logistics : Cash costs money. Notes must be printed, coins must be embossed. Value transporters bring the valuable cargo from A to B, thick-walled safes are to prevent thieves. However, even electronic payment methods are not free of charge and must be constantly further developed in terms of security.
Crime: Without cash, there would be less undeclared work, drug trafficking and money laundering would be contained – say the advocates of a cashless society. But who wants to do illegal business, could switch to other currencies. Even virtual currencies such as “bitcoins”, which are beyond the control of central banks, could be used.
Health: “Cash is a disgusting affair” – so drastically formulated by Mastercard. The credit card issuer is confirmed by studies and surveys: 26 000 potentially harmful bacteria cavorting accordingly on an average European banknote. And two-thirds of Europeans are convinced that dealing with coins or banknotes is unhygienic and leaves dirt on their fingers.
Monetary policy: Monetary policy functions essentially through “book money”, such as savings deposits and loans. A central bank can steer savings and lending interest to some extent by changing its policy rates. In the eurozone, interest rates are at record lows. For consumers and businesses, the incentive to stop lending money and to hoard it in coins and banknotes increases. However, this limits the ability of a central bank to push the economy through super-cheap money in times of crisis. Without cash, the power of monetary policy would be greater.