What future for cash in Germany?

German Federal Bank

February 1, 2024 00:02 Robert Klatt

In Germany, cash is the most common means of payment. The Deutsche Bundesbank (BBk) has examined how important cash could be in 2037.

Frankfurt am Main (Germany). According to a study by the management and technology consulting company BearingPoint, payment behavior has changed significantly in Germany in recent years. EC and credit cards as well as PayPal have become significantly more popular. However, the most used means of payment in the Federal Republic remains cash. An ongoing study by the German Federal Bank (BBk), according to board member Burkhard Balz, examined how the liquidity could be used in the future. To this end, analysts have created three scenarios for cash usage in 2037.

“We wanted to get an idea of ​​the social and economic environment in which liquidity will be embedded in the future so that we can derive options for action. Future scenarios aim to ensure that the right decisions are made so that cash continues to be an attractive, generally available and accepted means of payment and store of value in the future.

According to the BBk, the three scenarios are not concrete forecasts, but rather potential images of the future, intended to show the effects of possible developments.

Scenario 1 – The world of hyperdigital payments

In the world of hyperdigital payments, digitalization is very advanced and almost no cash is used on a daily basis. Geopolitical developments and technological progress lead to significant economic and social upheavals. The use of artificial intelligence (AI) plays a key role in maintaining prosperity. Bank branches and ATMs are rare and even withdrawing cash from retail checkouts will no longer exist as cashless payments have become the norm.

Scenario 2 – The world of payments and the renaissance of cash

In the cash renaissance, cash is more important because people have become more crisis-aware in response to problems in global supply chains and are therefore buying more and more local products. However, using cash will be much more convenient as there are no more 1 and 2 cent coins, there are rounding rules and many stores use automatic payment machines. So, in this scenario, even though cash use initially declined, it returns to new stability in the 2030s.

Scenario 3 – The disappearing world of hybrid payments

In the world of hybrid payments, the use of cash is highly dependent on individual living conditions and attitudes. Retailers prefer to accept cashless payments and access to cash is deteriorating. This makes the use of cash increasingly complicated.

People want to keep money

In all three scenarios, the share of cash in total transactions will initially decline over the next 15 to 20 years. However, cash is not disappearing completely. As access to liquidity is significantly more difficult in two of the three scenarios, individuals’ freedom of choice would be considerably reduced. Furthermore, liquidity could no longer fulfill its stabilizing function in the event of a crisis. Furthermore, a majority (93%) of Germans surveyed in the study would like cash to remain in place. According to Balz, the study shows that freedom of choice must be preserved.