Germans love cash. On average, everyone has around 100 euros in their wallets. But the cash is threatened with creeping death. On January 1, 2023, a new law restricting cash payments will take effect. But is that the end of cash?
May 24, 2022 will be remembered by many. On the day, those who carried cash had an advantage. The reason: A failure of many card payment terminals in retail did not allow card payments. Such disruptions impressively demonstrate that cash is still an integral part of payment transactions. Nevertheless, in October the federal cabinet agreed on a new law that restricts cash payments. At the same time, more money will be minted in 2023 than in previous years. Are euro notes and coins on the verge of extinction or is cash far from over?
CASH: REALLY AT THE END?
The Sanctions Enforcement Act II comes into force on January 1, 2023. Many see the law as the first step in getting rid of cash. However, Section 16a of the Money Laundering Act only prohibits paying for real estate, land, houses and apartments in cash. Regardless of this, the upper cash limit is also under discussion. Federal Minister of the Interior Nancy Faeser said in November : “A 30,000-euro cash purchase of jewelry or watches should soon be a thing of the past.” She advocates the introduction of a general upper cash limit. The amount: 10,000 euros.
Many see another sign of the end of cash in the digital euro. Europe’s currency watchdogs are currently working on a digital euro. The first results should be available in October 2023. But even the digital euro should not make banknotes and coins obsolete directly. In addition, more and more notes and coins come into circulation every year, which also speaks against the abolition of cash.
According to the Deutsche Bundesbank , the number of banknotes in circulation has increased by an average of around six percent per year over the past ten years. With a value of over 1.5 trillion euros at the end of 2021, cash in circulation has increased almost sevenfold since the euro was first issued in 2002. During the same period, around 141 billion coins with a total value of over 31 billion euros were issued across Europe. So the cash in circulation is increasing year by year. In 2023, an extra shovel of euros will even come into circulation.
2023 MORE NOTES AND COINS IN CIRCULATION
Above all, Croatia’s entry into the euro on January 1, 2023 is driving up the production of coins in the common currency area. The European Central Bank has authorized the 19 euro countries and Croatia to produce coins with a total volume of almost 2.6 billion euros. For comparison: This year it was around 1.8 billion euros. So a cash end looks different.
Basically, it’s all card payers who are driving the end of cash, a recent study found. Accordingly, young people carry fewer and fewer notes and coins with them and pay more and more often by card or mobile. As a result, ATMs are disappearing and older people can no longer get cash as easily as they used to.
THE BENEFITS OF CASH
Cash is the only means of payment that enables all citizens to participate economically, regardless of whether they have a bank account or not. This also includes children, for whom cash is usually the first and sometimes the only way to participate in economic life and to learn how to handle money. In addition, cash protects the privacy of its users.
A current survey by the consumer advice center shows why people in this country still prefer to pay with cash. Those surveyed gave the most common reasons for paying with cash: control over spending (35 percent), personal freedom over the form of payment (17 percent), data protection (13 percent), habit (13 percent) and a fundamental support for cash as a means of payment (13 percent).
