The Bundesbank fears that an adequate supply of cash in Germany could no longer be guaranteed in a few years. The background is the declining number of bank branches and ATMs where customers can get cash, according to one study study on the question of what role cash could play in the future.
In its first study of this kind, published on Wednesday, the Bundesbank outlined three scenarios for paying with cash in 2037. “In no future scenario will cash disappear completely,” said Burkhard Balz, a member of the Bundesbank’s board of directors. “But in two out of three payment worlds, access to cash and acceptance would not be fully guaranteed.”
Cash is more important in Germany than in other countries
The Bundesbank is legally obliged to ensure a sufficient supply of cash so that people can decide whether to pay in cash or digitally. However, the increasing digitalization of society could lead to restaurants, for example, only accepting card payments. On the one hand, cash is legal tender, but on the other hand, freedom of contract applies: retailers could refuse to accept cash if they previously agreed this with the customer, for example by posting a corresponding notice at the entrance to the store. So far this has rarely happened in Germany, but cashless payment transactions are widespread in Scandinavia.
“Cash is not only our core task, but also our core product. We would like to keep it very attractive,” said Balz. Although the use of cash will continue to decline, cash is more important in Germany than in other European countries, said Balz. The use of banknotes and coins promises more security for many citizens in this country. They store iron reserves at home in a safe or shoebox for bad times. Not without reason: The financial crisis of 2008 showed how quickly people have to line up in front of the bank in an emergency to get cash. But overall the use of cash is declining. Using a payment card or cell phone is too convenient, which younger people in particular appreciate.
The Bundesbank has outlined three scenarios
The Bundesbank outlined the future of payments in its study with three scenarios. The scenario “The hyperdigital payment world” describes a very digitalized world in which cash has almost disappeared from most people’s everyday lives, there are only a few bank branches or ATMs left and withdrawing money from the checkout is no longer possible because you are in retail can hardly pay in cash anymore. The scenario “The payment world in the cash renaissance” describes a partial return to cash and its advantages. Cash use initially fell in this scenario, but stabilized in the 2030s. The scenario “The disappearing hybrid payment world” reflects an environment in which the use of cash depends very much on people’s living conditions. In retail, customers are encouraged to make cashless payments. Access to cash is steadily deteriorating and cash use is creeping out.
“In two scenarios, there would be virtually no freedom of choice when paying and the stabilizing function of cash in times of crisis would be jeopardized,” said Balz. “In the representative survey, 93 percent of those surveyed said that they would like to continue to decide for themselves in the future whether they would pay in cash or non-cash,” said Balz. To ensure this, all actors in the cash cycle and politicians would have to act. “We can’t do this alone,” said Balz.
At the same time, the European Central Bank, the Bundesbank and the other central banks in the monetary union are working on the introduction of the digital euro. Its introduction is not expected until 2026 at the earliest. The digital euro is intended to complement cash – not replace it. ECB boss Christine Lagarde initiated the “preparatory phase” of the ambitious project a few months ago. “We need to prepare our currency for the future,” she said. “We see a digital euro as a digital form of cash that allows all digital payments to be made free of charge and at the same time meets the highest data protection standards.” Other central banks are also developing digital currencies, but many people believe they have a disadvantage: they leave traces, while the use of traditional cash ensures personal anonymity: you can buy things without leaving a payment trail.