As 'Русская Германия' notes, the traditional German proverb Nur Bares ist Wahres ('Only cash is real') risks becoming a historical relic: the federal government is seriously discussing plans to introduce restrictions on cash payments, if possible uniform across the entire European Union, but as a last resort only national ones. The maximum amount that can be paid without a bank transfer, credit card, or electronic payment systems should be 5,000 euros.
The Federal Ministry of Finance cites the growing threat of international terrorism as the main reason for introducing the limit. Undoubtedly, the fight against the shadow economy, in which billions of euros circulate in cash, also plays an important role in such planning. Restrictions on cash transactions are intended to create additional difficulties for terrorists, criminals, fraudsters, tax evaders, and other antisocial elements.
However, they will significantly complicate life for ordinary citizens, and especially for those who are in business. Car and antique dealers, furniture, jewelry, and art dealers have raised the alarm: in these areas, transactions exceeding five thousand euros are everyday, and buyers with a wad of bills are no less common than those who pull out a plastic card from their wallet.
Consumer advocates and especially human rights activists are also not at all thrilled about the possible introduction of a limit on cash circulation. German citizens traditionally react very sensitively to any restrictions in this area, as well as to attempts by the state to monitor them. After all, the abolition of unlimited cash circulation is perceived by many as nothing less than an attempt to make us 'transparent,' depriving private individuals in the financial sector of their last hope for anonymity.
Residents of Germany often have a more negative attitude towards all kinds of electronic payment systems and even traditional bank cards, let alone credit cards, than many other Europeans. Credit systems have penetrated our daily lives less than in many neighboring countries, non-cash payments are still less common, and in retail trade, according to the Federal Central Bank, about 80 percent of all purchases are paid in cash.
'Cash is real protection of personal data,' reminds Klaus Müller, chairman of the Federal Association of Consumer Protection Organizations (Verbraucherzentrale Bundesverband). 'Electronic payments and plastic card transactions leave traces that are used to compile consumer profiles, and then they are used for commercial purposes.' Human rights activists are completely dissatisfied with the concept of a 'transparent citizen,' under which intelligence services, financial control bodies, and in an unfortunate but likely scenario, hackers and other malefactors, will get an additional opportunity to track citizens' personal lives and interfere in them.
Just last year, three-quarters of Germany's residents, in a sociological survey, did not want the country to follow the path of neighboring Denmark, which left the question of whether to accept cash at all to the discretion of retail chains. 'Now the fight against cash is intensifying in Germany too,' notes the current changes, says Gerald Mann, professor of economics at the Ludwig Maximilian University of Munich.
Lawyers are confident that embedding a restriction on the free circulation of cash into German legislation will be extremely difficult. The potential limit on cash payments is met with skepticism even among bankers – although in the banking sector, reducing cash turnover and the need to ensure smooth circulation of a huge number of banknotes promises cost reduction and significant savings. Nevertheless, the Federal Association of German Banks (Bundesverband deutscher Banken) does not support the government initiative, emphasizing that 'the discussion about the future of cash should take into account Germany's cultural traditions.' Board member of the Federal Bank, Karl-Ludwig Thiele, has no doubt: Germans are not ready to give up the ability to pay in cash, and any restrictions in this area 'mean for the country's residents a loss of part of their individual economic freedom'.
At the same time, fans of cash transactions may be worried by another piece of news, this time from Frankfurt rather than Berlin: the European Central Bank (ECB) is considering the possibility of withdrawing the 500-euro banknote from circulation – the largest banknote in circulation in the Eurozone countries. ECB President Mario Draghi recently addressed a similar initiative to members of the European Parliament. According to Draghi, the Central Bank's leadership is conducting 'technical work' on this issue, coordinating how to adopt and how best to communicate the final decision to Europeans. It can be adopted by the ECB Governing Council, which includes heads of central banks of all 19 Eurozone countries. According to statistics, there are currently over 600 million 500-euro banknotes in circulation, worth 300 billion euros. About a quarter of this amount is stored outside the euro area.
The background of this decision by the European Central Bank is the same – the fight against terrorism and corruption. In the German economy, over 100 billion euros are 'laundered' annually, claims prominent German legal scholar and criminologist Kai Bussmann, professor of law at the University of Halle-Wittenberg. Most 'dirty' money comes from human trafficking and drugs, and is funneled into 'clean' transactions such as buying real estate, works of art, antiques, and is churned through the restaurant business. The only way to introduce funds from illegal sources into legal circulation is cash, and the favorite banknote of criminals is 500 euros.
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