The world’s governments, central banks, fintech firms, banks, credit card companies, telecommunication behemoths, financial institutions, large retailers, all are behind a drive to get rid of cash.
The idea supposedly is to combat crime and terrorism. But widespread public ignorance, apathy, and disinterest is allowing this drive to a 100% electronic world to take place. This would endanger basic freedoms and attack the ability of the poor and the uncreditworthy to manage their lives.
But Carl-Ludwig Thiele, Bundesbank board member in charge of cash issues, said in a speech last week that “I have my doubts that introducing a cash limit or getting rid of bigger denominations can really prevent terrorists or criminals from engaging in illegal activities. We also should ask ourselves: what sort of an understanding of government forms the basis of these proposals? Citizens should not be put under general suspicion.” Clearly there is a commitment to democracy here.
In fact, the promoters of the cashless society are in error when they argue that people don’t want to use cash. In its own study prominently featured on its homepage, the Bundesbank found that despite all the media hype over the demise of cash, physical currencies still remain the principal means of payments across many advanced economies.
In the study, more than 18,500 consumers in Australia, Austria, Canada, France, Germany, the Netherlands, and the United States were asked to keep a written record of what payment methods they used. It turns out that consumers still frequently opt for cash at the point of sale, although in some countries there is a greater preference than in others.
In terms of volume, cash accounted for more than 50% of payment transactions in all of these countries, with the exception of the US. In Germany (DE) and Austria (AT) over 80% of cash transactions were made using cash. In both countries, cash payments also dominated in value. A separate study by the Association of German Banks found that even among millennials, two-thirds prefer paying in cash to electronic means.
What is crucial isn’t so much the numbers but the very fact that the Bundesbank publishes this type of report so prominently, and in English, so that everyone can read it. It’s an obvious part of its campaign to keep cash-in-fist alive as a choice. And in Germany and Austria, the EU’s plans to suppress cash have already provoked a backlash.
Germany’s big tabloid The Bild published a scathing open letter titled, “Hands Off Our Cash,” while a broad spectrum of political parties condemned the proposed measures as an attack on data protection and privacy.
The fact that Europe’s most powerful national central bank is now firmly aligned with the defenders of physical cash could be a vital game changer in the war against cash.