New Cash Records Outside Banking System Records Bundesbank. The main reason, according to experts, is insecurity in seasons crisis.

The love of the Germans for cash is well known, perhaps unique in Europe. “(NUR) Bares ist Wahres,” says a traditional quote, which means: “The cash is true.” Despite the progress of technology, many financial issues still give a traditional advice: Pay as much as you can, so you realize how much money you spend and maintain a better supervision of spending, which is not the case when payments are made via card or instant payments.

Some prefer to pay cash so as not to leave traces in their electronic transactions, which lead to “bombardment” with advertising messages. Others resort to cash because they have difficulties with technology. There are also those who prefer cash for “cunning” purposes (therefore, under EU directive, Germany is obliged to impose restrictions on cash payments by 2026).

Nearly 400 billion euros in the “mattress”

So far the phenomenon is happy. However, the data announced days ago by its central bank Germanythe famous Bundesbank, probably surprised the bankers themselves: at 395 billion euros, the money kept in private households, outside the banking system, commonly “in the mattress”. This is a record amount, more than twice the one that Bundesbank calculated in 2013.

But all the circulated cash is increasing steadily. Not just in Germany. According to European Central Bank (ECB) figures, last March, € 1,564 billion worth of coins and coins were released in the eurozone, more than 500 billion larger than 2020. Giesecke+Devrient electronic payment company.

The ‘Paradox of Cash’

The strange thing is that more and more cash is circulating at a time when electronic transactions are increasing. Even in Germany this is true. While in 2020, in the first year of the pandemic, 60% of the transactions were in cash, in 2023 the rate was reduced to 53%. According to a study by the ENI Institute based in Cologne, published in May, only 33.8% of the transactions are now in cash.

How can electronic transactions are constantly increasing, but to end up in the mattress more and more cash? Analysts refer to a “cash paradox”. As a Bundesbank spokesman explains, “increasing cash in times of crisis – not only in times of pandemic – is a phenomenon that is often observed and is due to the insecurity that causes a crisis.”

The language of statistics says that every German has hidden 1,326 euros in his home, on average. An earlier Bundesbank survey showed that only 10% of the available cash is actually used for transactions. The rest end up “on the mattress” or even abroad.

Sources: DPA, Reuters, ARD