The ECB would do so at its own peril
Germany loves physical money. According to a Bundesbank study, approximately 80% of payments in Germany are made in cash. Even among millennials, two-thirds say they prefer paying in cash to electronic means, a much higher level than in almost any other advanced economy with the exception of Japan.
This is a big problem for a European establishment that is desperate to consign physical money to the scrap heap.
In January the European Commission telegraphed its intention to implement a mandatory continent-wide limit by 2018, even if it violates the “non-fundamental” rights of over 500 million EU citizens to privacy, anonymity, and personal freedom. The Commission’s plans are likely to meet strong resistance from certain quarters, in particular Germans.
When the Merkel government merely suggested last year that it was considering banning cash payments above €5,000, it triggered a fierce public backlash. The country’s biggest tabloid, Bild, published a scathing open letter titled “Hands Off Our Cash,” while a broad spectrum of political parties condemned the proposed measures as an attack on data protection and privacy.
Even the head of the Bunderbank, Jens Weidmann, criticized the government’s proposals, telling Bild (emphasis added): “It would be fatal if citizens got the impression that cash is being gradually taken away from them.”
Needless to say, most central bankers do not share Weidmann’s misgivings…
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