Monday, March 7, 2016

Bundesbank Board Member in Charge of Cash Likes Currency, Doesn't Want to Get Rid of Currency

Carl-Ludwig Thiele's job description at the Bundesbank says:
Cash Management
Economic Education, University of Applied Sciences and Technical Central Bank Cooperation
Payment and Settlement Systems
They have a picture but we prefer this one:
There's a happy guy.
He is very German.*

Here's his March 3 speech in London and here's a machine translation (apologies, I'm running into a meeting so that will have to do, sorry)
And here is the bit that caught my attention: 
Due to recent events I would like to start a debate that will be held in Germany, but also in other EU Member States for several weeks. In Germany, the Federal Ministry of Finance has proposed to prohibit cash payments over € 5,000. There is also in the ECB's considerations to abolish the 500-euro banknote. Both measures are intended to contribute to complicate the financing of terrorism. This objective, I support of course. I have doubts however about whether terrorists or criminals are actually prevented from illegal actions when a cash limit introduced or large denominations are abolished. This is also the fact that in the US now by economists even the abolition of the 100-dollar bill is required, which is still "too large" appears.
I want to emphasize that the Bundesbank remains neutral with respect to different forms of payment. We want citizens to pay in the form that they desire. one of them the cash, especially in Germany. Here around 79% of all payments at the checkout are settled in cash. But even in the UK there are more than 50%.
I decline at this point, the advantages of having cash to citizens, to list. However, I allow myself three indications: First cash payments are not a particularly expensive method of payment. The cost per transaction cash suggests both the debit card and the credit card significantly. Including the costs to revenue, the cash has to admit defeat of the debit card, but cuts still better than the credit card.
Second, cash is the only way for citizens to pay with central bank money and legal tender. All other cash based on private money creation - and is generally subject to a certain risk. One should also keep in mind if you want to limit cash payments....MORE
HT: Wolf Street who quoted the speech as part of a longer post:
...“I have my doubts that introducing a cash limit or getting rid of bigger denominations can really prevent terrorists or criminals from engaging in illegal activities,” Carl-Ludwig Thiele, Bundesbank board member in charge of cash issues, said in a speech last week. “We also should ask ourselves: what sort of an understanding of government forms the basis of these proposals? Citizens should not be put under general suspicion.”...
*Finally, the Germans do like currency:
Jan. 2012
Missing: 13.3 Billion Deutschmarks
July 2012
Some of the Missing Billions of Deutschmarks Have Been Found
December 2015
Germans Still Hoarding Old Deutschmarks (€6.6 Billion Worth)
And I'm late for the meeting.