For Germans, Only Cash is True
Sep 27, 2023
A popular expression from Europe’s largest economy is Nur Bares ist Wahres: only cash is true. News and analysis site Foreign Policy recently explored Germany’s appreciation of physical money and the benefits it brings to a diversifying payments landscape.
Columnist Anchal Vohra highlights privacy and financial control as key advantages offered by cash. While the referenced ‘financial crises depleting bank balances overnight’ are far from recent history, the present economic struggles felt worldwide are driving people in many nations to take control of their finances with cash, and Germans are well ahead of the trend.
Speaking to natives in Weimar, Vohra heard ‘spending in cash encourages them to spend less and stay in control of their expenses’, while also protecting personal information. They pointed out that ‘if you use a card, the bank knows everything about you.’
Agnieszka Gehringer, a professor of economics at Cologne University of Applied Sciences, says there is a cultural appreciation for the safety and security of cash in Germany. She also notes that, while the payments landscape is changing and incorporating ever-more cashless options, Germans may not feel motivated to change spending habits that work well for them.
If I have been customarily using cash as a payment method for ages and I know how it works and my data remain protect, there is no particular reason to change my habit... For some, cash is a means of self-control and self-supervision. It is more transparent and easier to track the record of personal expenditures.
Vohra cites further benefits of cash, including the avoidance of debt incurred by using credit cards, and its ease of use for everyone from the very young to the very old. ‘It’s also cheaper for retailers and end consumers on transactions under 50 euros,’ she notes, ‘as the cost of holding cash is lower than the fees incurred with non-cash payments.’
Regarding a common argument from anti-cash lobbyists that cash ‘exacerbates the shadow economy’, experts Vohra spoke with emphasise that the role of physical money within illicit transactions ‘tends to be overstated’. Friedrich Schneider, a professor of economics at Austria’s Johannes Kepler University and co-author of a study on illicit cash use in Germany, is clear that cash does not support shadow economies.
Cash does not promote a shadow economy, as it is not a cause. Causes are tax burden, regulations, etc. If cash is completely abolished, then people find other means.
Doris Neuberger, Head of the Money and Credit Department at the University of Rostock, agrees, pointing out that a great deal of criminal activity today is driven by digital money, which offers particular benefits for crime not replicated by banknotes and coins.
Nowadays, the ideal medium for illegal drug transactions is not cash, but Amazon gift cards. Gift tokens allow for anonymous payments anywhere in the world and, unlike cash, do not require a face-to-face transaction. The same holds for prepaid credit cards, which can be loaded with cash anonymously.
Though Vohra herself refers to a preference for cash as being ‘determined to remain in the past’, she presents a strong argument for the continued relevance of cash in the modern payments landscape, ensuring individuals retain choice over how to manage their finances, and economies remain resilient and inclusive.