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Cash remains popular - and is hoarded

2021-06-24T20:41:42.121Z


In the corona pandemic, people pay by card more often. Nevertheless, cash is still very popular.


In the corona pandemic, people pay by card more often.

Nevertheless, cash is still very popular.

Frankfurt / Main (dpa) - The demand for cash remains high despite the growing trend towards paying without notes and coins.

"I suspect that people in the Corona crisis hoarded cash out of uncertainty and because they had no way of spending money," said Bundesbank board member Johannes Beermann of the German press agency.

“The uncertainty in the pandemic is high.” In an estimated 40 percent of the demand for cash in Germany, the Bundesbank suspects hoarding in Germany as a motive.

According to the central bank, avoiding negative interest rates could also play an increasing role.

Commercial banks in the euro area have to pay 0.5 percent penalty interest if they park money at the European Central Bank (ECB).

Many financial institutions pass the costs on to business customers, but increasingly also to private customers.

At the same time, many people consider cash to be a safe store of value in times of crisis.

Banknote demand was particularly high at the start of the pandemic in Europe in March 2020.

Overall, the value of the notes issued by the Bundesbank rose by 9.5 percent last year.

A similarly high growth rate in the currency in circulation was last seen in 2014 at 10.2 percent.

"When and how the development will normalize in the wake of falling corona numbers and the associated relaxation of restrictions cannot be estimated at the moment," said Beermann.

"We are currently noticing in our branches that cash deposits and withdrawals are increasing again."

At the end of May 2021, banknotes issued by the Bundesbank were in circulation with a value of 839 billion euros, 52 billion or 6.6 percent more than a year earlier.

The payment behavior of consumers in Germany had changed in the corona crisis year 2020.

According to a recently published study by the Cologne retail research institute EHI, every third purchase in stationary retail is now paid for by card.

“The crisis has accelerated the decline in cash sales in stationary retail by at least three years.

In addition to the significant growth in online business, tickets are the clear winners of the crisis, ”explained study author Horst Rüter.

According to the Bundesbank, with a transaction share of 60 percent, cash is still by far the most widely used means of payment in Germany.

The central bank assumes that notes and coins will remain a popular means of payment even after the Corona crisis - and the most widely used for the foreseeable future.

© dpa-infocom, dpa: 210620-99-67074 / 2

Cash facts and figures

EHI study

Source: merkur

All news articles on 2021-06-24

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