Jens Weidmann will be retiring as President of the Bundesbank at the end of the year.

On Wednesday he used the Bundesbank's cash symposium to promote cash again.

Weidmann describes the strengths of bills and coins and outlines the future role of the digital euro: Even if cashless payment got a big boost in the pandemic, cash remains important.

The digital euro will not replace it.

Banknotes worth 70 billion in demand in 2020

Christian Siedenbiedel

Editor in business.

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Especially in times of high uncertainty, people rely on cash. For example, at the beginning of the corona pandemic, the demand for cash in Germany temporarily increased strongly. The branches of the Bundesbank had issued banknotes with a total net value of 70 billion euros last year. "If you were to string these banknotes together, you could wrap the notes almost three and a half times around the earth's equator," said Weidmann. This year, too, the demand for cash has tended to continue to grow.

Above all, paying with cash is easy, safe and fast. There are also three other facets to emphasize: “Firstly, participation - thanks to its ease of use, cash is also a very important means of payment for many people who are not so tech-savvy or for those who have limited eyesight,” said Weidmann. An estimated 13.5 million adults in the euro area did not have a bank account; they are essentially dependent on cash. Cash doesn't exclude anyone. It is a means of payment for everyone - regardless of whether they are digital natives or digital outsiders, young or old. Second, control - because you actually have to pick up cash when paying, many people find it easier to control their spending. And most people in Germany see an educational function. Allow cashIntroduce children to dealing with money. "Third, anonymity - whoever pays cash does not have to reveal his or her identity," said Weidmann: "Many righteous citizens value cash because of this quality."

Anonymity can also be abused

But anonymity could also be misused for illegal purposes, warned the Bundesbank President.

It is all the more important to take action against money laundering, corruption and other criminal activities.

In addition, anonymity is sometimes understood as an aspect of a larger concept: privacy.

Most people would have a deep need to protect part of their life from the eyes of others.

"Cash helps to protect privacy - not only through anonymity, but also because the flow of money cannot be tracked," said Weidmann.

So far, cash has also been the only way for citizens to hold central bank money and use it to pay, said Weidmann. A digital euro - as is currently being studied in the Eurosystem - would change this. With it, people and companies in the euro area could also pay with central bank money in a digital environment - simply, securely, quickly and inexpensively. The digital euro could help lower transaction costs, make payment transactions more efficient and stimulate the development of innovative services.

“In addition, the digital euro would enable people to pay with state money even if cash should no longer play such a major role in our society.” Weidmann assured us that a digital euro should not replace cash, but only supplement it : "As long as the citizens of Germany ask for banknotes, the Bundesbank will provide them." In a survey by the Bundesbank in spring, only 40 percent of those questioned said they could basically imagine using the digital euro. Perhaps The possibilities of digital technology remind some in an uncanny way of the English band “The Police” with their hit “Every breath you take”. And every move you make, I'll be watching you ”.

Weidmann admitted that despite all the parallels, the digital euro will probably not be digital cash.

“It would share some important features with cash, but it would differ in other ways.” In view of the risks involved, it might make sense to proceed step-by-step with the digital euro, said Weidmann: “That means starting with a certain bundle of the digital euro To equip properties that allow important uses as a means of payment - further functions could be added later. "