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Opinion: Cash means freedom

Zhang Danhong
February 5, 2016

The German government's plan to limit cash payments to a maximum of 5,000 euros has triggered a heated debate about the pros and cons of cash. DW's Zhang Danhong is not convinced by arguments against paper money.

Parteienfinanzierung Symbolbild
Image: picture-alliance/dpa/P. Seeger

Cash facilitates crime, preaches Harvard economist Kenneth Rogoff, so cash should be killed. The German Finance Ministry picked up on the idea and is now mulling a ceiling of 5,000 euros for cash payments. That would help fight money laundering and tax evasion, it assumes. Besides, cash plays an important part in financing terrorism.

But who is so naive as to think a cash limit would actually prompt terrorists to give up their business and lead decent lives? Criminals would just switch to other forms of payment. Money laundering with the help of Bitcoin, a cyber-currency, is already on the rise.

Others in the lead

Proponents of the abolition of cash often cite Scandinavian countries as positive examples. Sweden, they say, will soon become a cashless society. In other words: Germans should not make such a fuss. In the European Union, they add, 12 countries have already introduced cash payment limits, and no revolution has broken out there.

Zhang Danhong Kommentarbild App
DW business editor Zhang Danhong

This argument, too, fails to convince. 12 is less than half of the 28 EU countries. Besides, the Germans' love for banknotes and coins is shared by people around the world, among them the Chinese. Impossible to imagine Chinese New Year festivities without the cash-filled red envelopes that are common gifts there.

Granted, cash does open the floodgates for corruption. A cashless world would also be free of bank robbers, runs another argument. But no infrastructure for electronic payments is immune to manipulation and breakdowns, and the loss of a credit card can be more painful than the loss of cash.

Money - yuck!

There's another objection to cash. It's unsanitary, even filthy. More than 11.000 strains of bacteria are said to have made it onto German banknotes. Mastercard kindly pointed out this dreadful state of affairs from which the credit card company is, of course, only too willing to free us.

Despite this kind of findings, Germans have not lost their appetite for cash. What doesn't kill you makes you stronger. 79 percent of payments in the country are made in cash, according to the Bundesbank.

One reason why Germans are reluctant to give up their functioning cash system might be the experience of having seen their money go up in smoke twice in the past century. Another might be their slowness in adapting to online trading and all things digital. Plus, many simply feel more at ease if they can do their shopping anonymously. When I pay cash in the supermarket, nobody except my family knows what I bought.

A cashless world would turn us into transparent customers with transparent bank accounts. George Orwell's Brave New World, that is.

Cash limit - first step towards abolition?

But what if that's just what the government wants? First, they limit cash payments. Then, they lower the ceiling further little by little until customers start feeling like criminals by just touching the dirty bills.

And what if the government's focus has never really been on terrorists and tax evaders, but on us? It wouldn't say so in public, of course. Economists are more straightforward. In cashless societies, it would be easier for central banks to introduce negative interest rates to stimulate the economy, Kenneth Rogoff said.

Creeping expropriation

Mario Draghi is still reluctant to do that. Because bank customers still have the option to withdraw all their money in cash, thus bringing the financial system to its knees. But if that loophole were closed, negative interest rates would turn into a much more powerful instrument.

In this Brave New Cashless World, the government would have complete control over its subjects, and could get rid of its debt along the way.

We should not allow that to happen. "Money is coined liberty," runs the famous quote by Russian author Fyodor Dostoevsky. We should not let it go without putting up a fight.

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