News in Brief

Bundesbank Celebrates 20 Years of Euro Cash

The Bundesbank held an event on 9 November in Berlin celebrating the 20th anniversary of the euro. Prof Dr Johannes Beermann, Member of the Executive Board, noted the tremendous achievement of 11 founding euro countries jointly leaving behind overnight their previous national narratives despite their different cultures, languages and historical backgrounds.

He made the point that the physical existence of the euro as banknote and coin has contributed to the great acceptance of this European project, since the cash can be touched, it leaves a deeper impression on the user, thus creating trust among people.

The Bundesbank is currently conducting a study on the cash of the future, which will be published next year. The aim of the study is to position cash in 15 years time, and beyond, as an attractive, reliable, competitive and generally accepted means of payment and store of value and to ensure its infrastructure.

Cash remains the number one payment mode in Germany. In a public survey executed during the pandemic, 90% of the people said they will use cashless payment, but now 58% of all transactions in the shops are still being made with cash.

Other speakers included Brett Scott, Kenza Ait Si Abbou from IBM speaking about digitalisation, Prof Dr Alexandra Niessen-Ruenzi on the gender difference in finance, and a panel discussion with representatives from politics and the economy discussing ‘Euro Cash – where would it be on the 30th anniversary?’ 

Germany Plans Cash for Outages

As the war in Ukraine has shown, resilience is key. It is reported that the Bundesbank is taking steps to be able to maintain the supply of cash should power outages mean the electronic payment system does not operate. While limiting cash withdrawals is possible, the plans are said to include ensuring there is fuel for cash movements.

The Bundesvereinigung Deutscher Geld- und Wertdienste (BDGW) made the comment: ‘We must preventively tackle the realistic scenario of a blackout. It would be totally naive to not talk about this at a time like now.’ 

Cash Declining, Cash Required

Deutsche Bank research analyst Marion Laboure has written a paper, ‘Future Payments: Towards the End of Cash?’ following on from her 2020 piece on the same subject.

Her report acknowledges the resilience of cash using Deutsche Bank’s own proprietary survey of 3,600 individuals across the UK, US, China, Germany, France, and Italy. This found that one in three Americans and Europeans still ranks cash as their favourite payment method. More than half of the people in developed countries believe that cash will always be around; an opinion that has remained steady both pre- and post-pandemic. The Reserve Bank of India reported that six years on from the country’s abolition in November 2016 of 500- and 1,000-rupee banknotes in a government bid to reduce dependence on paper currency, the amount of cash in circulation has risen by more than 70%.

It also makes the point that in countries like Sweden, China and Brazil, cash is declining fast and far. The author argues that rising interest rates will cause a flight from cash as people deposit and invest money. Deutsche Bank research has identified a strong negative association between the level of central bank interest rates and cash in circulation. While inflation is likely to fall back next year, it is likely to be some years before it falls back to a low level.

Having painted a picture of the momentum to digital payments seeming unstoppable, Laboure finishes by saying that cash is essential for 1.4 billion people worldwide. For many groups of people in all society’s, cash is still the most reliable form of payment.

Cash Welcome

A new grass roots organisation has been created in the UK addressing the psychological pressure to go cash less. Called CashWelcome it aims to create a national mark of cash acceptance. It says it is a grass roots movement founded by independent business owners and members of the public.

It argues that if you tell a lie often enough, it becomes a truth. Official statistics consistently support the case that cash is the most widely means of payment and yet those who want a different future are able to tell the story that the end of cash is inevitable, it is being driven by public demand and it is for the best. Public policy and the mainstream media narrative have bought in to this story.

CashWelcome is providing a universally recognised sign for retailers to use that tells the public that cash is perfectly normal and gladly accepted. The campaign makes the points;

• Most independent businesses continue to value cash

• Cash helps small businesses to remain competitive

• Without cash, there is no alternative to digital payments

• Accepting cash supports independence.

Without cash, all transactions would be dependent on technology and monitored by third parties, and business owners would have no choice but to pay the increasing fees of a small group of powerful digital payments institutions.

BankHive Enters the Market

NoteMachine, a part of the Brinks group, is launching a new concept in bank branches called BankHive. It launches officially in January 2023 but was being displayed at the RBR Branch Transformation event in London.

Just as the UK’s Post Office and OneBanx have attempted to address the widespread closure of bank branches with multi-bank branches sharing facilities, NoteMachine is seeking to address the same problem, albeit in a different way.

BankHive offers scalable, configurable bank ‘containers’ that can be put where the customers are without the real estate requirements of a traditional bricks and mortar branch. Imagine a shipping container, and they come in 10-, 20- and 40-foot sizes, which is fully equipped as a bank branch, and which can be delivered and installed quickly and cheaply.

Despite the reference to a ‘shipping container, these units are designed to be modern, light and bright creating a welcoming environment for bank customers. The bank can configure them as desired – with full suites of cash handling equipment, with meeting rooms, with living roofs, with solar panels, with virtual reality capability… or not. Exactly as the bank wants. Put them into a site for six months and see if customers use them. If not, move them too somewhere better.

In January, the first customer will be made public. An interesting response to the UK’s branch desert and ‘access to cash’ challenge.