Cash is king no more in Germany as cards gain ground
Cash is king no more in Germany as cards gain ground
The Bundesbank has been a staunch advocate of cash in the face of a global shift to electronic forms of payment such as debit cards and an international debate about the idea of digital-only money issued by central banks.
But a survey of about 2,000 people by the German central bank showed debit and credit cards were gradually gaining ground in the country, even if cash remained the country’s favorite form of payment.
“Cash remains the most popular, but card payments are increasing,” Bundesbank board member Carl-Ludwig Thiele said.
Cash accounted for 47.6 percent of German transactions by volume last year, down from 53.2 percent three years earlier and below the half mark for the first time since polling started in 2008, the survey showed.
Cards grabbed a 39.4 percent market share last year compared to 33.4 percent in 2014, mirroring a global trend that has long taken hold in many other countries including Sweden and Britain.
Internet payments also grew but still accounted for a modest 3.7 percent of total volume.
Germans and Austrians are the biggest users of cash among countries in the euro zone’s richer “core,” according to a recent study by the European Central Bank (ECB).
This preference has been associated with worries about privacy and a deeply ingrained diffidence toward the state, which some trace to the era of the Nazis and of communist East Germany.
The Bundesbank survey found most Germans thought that cash was useful to teach children about the use of money and to ensure a better control of one’s personal finances.
The vast majority also believed the abolition of notes and coins would cause problems to parts of the population, such as the elderly, while only just over a third saw it as a way to fight tax evasion and money laundering.
Speaking at the same conference, the Bundesbank’s president Jens Weidmann said getting rid of cash or replacing it with digital money issued by central banks would be the “wrong response” to the challenges faced by central banks at times of low inflation.
The idea of a digital currency giving holders a direct claim on the central bank is under study by Sweden’s Riksbank and has been touted by some academics as a way to extend the reach of monetary policy when interest rates on deposits are below zero.
But Weidmann rejected it and defended the use of cash and means of payments that go through commercial banks.
“(Getting rid of cash) would be the wrong, completely disproportionate response to the policy challenges of the zero lower bound,” he said.
“The same goes, obviously, for the introduction of digital central bank money with the aim of crowing out cash and enforcing negative rates across the board.”
He echoed the ECB’s view that giving depositors an option to hold money directly at the central bank would worsen bank runs at times of trouble. Weidmann added that it was up to central banks to promote more efficient payment systems that would quash the appetite for private digital tokens such as Bitcoin.
A German government plan to push for an upper limit of €5,000 to cash payments met fierce resistance two years ago, including by the country’s own central bank.
And the Bundesbank mounted a lonely opposition around the same time to the ECB’s move to retire the €500 note, its highest denomination, due to suspicions it was used by criminals. Thiele said on Wednesday he still hoped the purple bill would make a comeback when a new series of euro banknotes is unveiled.
Can a hungry Mali turn rice technology into ‘white gold’?
- Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change
- Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983
BAGUINEDA: When rice farmers started producing yields nine times larger than normal in the Malian desert near the famed town of Timbuktu a decade ago, a passerby could have mistaken the crop for another desert mirage.
Rather, it was the result of an engineering feat that has left experts in this impoverished nation in awe — but one that has yet to spread widely through Mali’s farming community.
“We must redouble efforts to get political leaders on board,” said Djiguiba Kouyaté, a coordinator in Mali for German development agency GIZ.
With hunger a constant menace, Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change.
Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983. It involves planting fewer seeds of traditional rice varieties and taking care of them following a strict regime.
Seedlings are transplanted at a very young age and spaced widely. Soil is enriched with organic matter, and must be kept moist, though the system uses less water than traditional rice farming.
Up to 20 million farmers now use SRI in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast, said Norman Uphoff, of the SRI International Network and Resources Center at Cornell University in the US.
But, despite its success, the technique has been embraced with varying degrees of enthusiasm. Uphoff said that is because it competes with the improved hybrid and inbred rice varieties that agricultural corporations sell.
For Faliry Boly, who heads a rice-growing association, the prospect of rice becoming a “white gold” for Mali should spur on authorities and farmers to adopt rice intensification.
The method could increase yields while also offering a more environmentally-friendly alternative, including by replacing chemical fertilizers with organic ones, he said.
He also pointed out that rice intensification naturally lends itself to Mali’s largely arid climate.