 |
| The Hilton Hotel at Frankfurt am Main (Source: Thomas Seidel) |
This year's Deutsche Bundesbank's cash
symposium at Frankfurt's Hilton Hotel became a passionate
constitutional appeal for keeping cash. A whole series of top-class
speakers from various social areas provided fundamental insights into
the topic. Nevertheless, strong opponents of classical cash are
forming, partly for unfair political motives, partly for pure
profit-oriented opportunism.
It seems strange that just on an Ash
Wednesday, a cash Symposium of the German Federal Bank takes place.
True cash ist the king and in German language also being called „ash“
or „cole“, as Karl Ludwig Thiele, on the board of the Deutsche
Bundesbank, responsible for the cash, expressed it very
appropriately. At the same time, this February 14 was also a
Valentine's Day. Is this calendrical coincidence, the last time in
1945, so just on the day when Dresden was unfairly reduced to rubble,
first come about again, a hint to the love of the Germans for cash?
While Ash Wednesday in Germany is traditionally used for vigorously
and sometimes indecent public political statements adressed to
political opponents, the participants of the cash symposium make
clear what freedom and democracy are in reality.
 |
| Jens Weismann President of the Deutsche Bundesbank (Source: Thomas Seidel) |
In contrary to the crypo tokens
The first challenge was made
immediately by the President of the German Bundesbank Jens Weidmann.
He opposes the application of the concept of money on any crypto
currency, such as the Bitcoin, and speaks from now on only
pejoratively but true of crypto tokens. A term consistently used by
every speaker in the event. Weidmann rejects the crypto token,
completely rightly, every typical feature and function of the money.
First and foremost, there would be confidence in a currency behind
which ultimately stands a central bank. The volatility of crypto
token is currently six times higher than that of equities and
thirteen times higher than of gold. Weidmann sees the reason for this
in the missing value basis. Crypto token would have no intrinsic
value, such as gold or by the reputation of a guarantor. Weidmann
does not see crypo token as a suitable alternative to state money.
Therefore, he advocates strong regulatory intervention. There should
be no link between the financial sector and crypto tokens. Cash is
the only way for individuals to hold central bank money. Weidmann
also expresses concerns about the introduction of digital central
bank money. Such would even be interest-bearing, albeit with negative
interest rates. But if anyone could convert his bank deposits at any
time into digital central bank money, the biggest risk would be a
bankruptcy in case of imminent bank failure. This could then lead to
the collapse of a whole banking system. For cash to continue to be
attractive, central banks should strive to keep payments up to date.
In the future, immediate payments with central bank money should be
possible.
 |
| Karl-Ludwig Thiele executive director of Deutsche Bundesbank (Source: Thomas Seidel) |
Practical cash handling
Karl Ludwig Thiele certifies the
Germans already a certain love for the cash. In their use, they are
not the world champion. Amounts up to 5 €uro are still paid for 96
per cent in cash. Only with amounts of about 50 €uro and above one
go in this country more about electronic payment methods. Cash is
easy and quick to handle. It allows every social group access to
business and eludes digital control. Cash is defined freedom and it
serves the informational self-determination. Thiele rejects criticism
of coins, even with small denominations. The German federal
government has earned recently 250 million €uro with the disbursal
of coins and a large part of the citizens wanted to retain even the
smallest coins. As is well known, the experiment to abolish coins in
the city of Kleve has failed. Not least because consumers felt
constantly ripped of by merchants.
 |
| Fritz Zurgrügg vice-president Swiss National Bank (Source: Thomas Seidel) |
Criticism of digital central bank money
The vice-president of the Swiss
National Bank (SNB) Fritz Zurbrügg also immediately appropriates the
term crypo token. He confirms a still large demand for cash in
Switzerland. Since the popularity for cash in Austria is even
greater, could one speak here of a German-cultural phenomenon? Rather
not. The more southern and eastern countries in Europe, have even a
greater love for cash. Despite the broader access of the population
to bank accounts and electronic payments, cash use has for many years
remained at a stable level of between 5 and 10 per cent, in relation
to gross domestic product. That applies, according to investigations
by the SNB, for most countries with a liberal economic character. An
exception, however, is Japan, where the cash share with 15 to 20
percent is significantly higher. It is known that the use of cash
enables more effective budget control, especially for private
individuals. Cash is visible and tangible and thus offers a greater
sensual experience than book money. Cash is reliable. You can pay at
any time and be independent of any technical infrastructure. Cash
protects against data misuse and thus possesses a property as a data
protection instrument. Of course, the existence of the cash depends
on the credibility of the issuer. Therefore, the quality of banknotes
should always be at a high technical level. Not least because of the
security against counterfeiting. Zurbrügg sees no further benefit in
digital central bank money. Instead, there could be undesirable
effects during use. For example, the functions of liquidity and
maturity transformation could be in trouble, especially in times of
crisis, when people shift their bank deposits into digital central
bank money. Digital means of payment are at most incomplete
substitutes of cash.
 |
| Yves Mersch ececutive director of European Central Bank (Source: Thomas Seidel) |
A plea for freedom through cash
Not only the Deutsche Bundesbank is
responsible for cash in Germany. As is well known, there is a higher
authority in the Eurosystem with the European Central Bank (ECB).
Represented here by central bank director Yves Mersch from
Luxembourg, where he is responsible, among other things in the ECB
for cash. Five European countries, which Mersch classifies
politically as the "law & order camp", have in the past
approached the ECB and argued against cash. Mersch counters that: A
protected legal tender is money only if there is an obligation to
accept; it has debt-discharging effect; must be accepted at face
value and no further fees may be charged. Individual Member States
could restrict the use of €uro but not the currency as such.
Banknotes exists for constitutional reasons. They only granted the
real implementation of fundamental rights in the first place. Only
with cash could the citizen exercise his fundamental rights in a way
that is not immediately comprehensible to the state. Cash protects
against a surveillance state and ultimately against a dictatorship.
Cash enables equality and the participation for social
underpriviledged and children. There are no hurdles to its use and
make one independent of electronic infrastructures. This applies
especially in critical phases. Restrictive measures may serve only
comprehensible purposes, such as the fight against terrorism or money
laundering. There would be no full alternative to cash. Even if its
physical form may change, it still remains cash.
 |
| Udo Di Fabio German constitutional judge (Source: Thomas Seidel) |
Cash means concrete freedom
After so much cash enthusiasm of the
occupational central bankers, comes with Udo Di Fabio a former German
constitutional judge to speak. He goes even further. Cash and freedom
legally formed an indissoluble bond. Cash has an intrinsic value that
can be replaced on paper by a guarantee power. The legislature has a
task to protect the cash. There must be a stable currency, at least
in a world structured by private law. A current negative example is
Venezuela. The anonymity guaranteed by cash is part of what we
understand by privacy. The retention function of cash in its
importance to the freedom of individuals would generally be
underestimated. Here, not only the grandma is rehabilitated, who
keeps the money under the mattress. Especially persecuted people can
report at any time how cash helped them to get into freedom again.
Freedom and security must be in a balance. The totally secure state
would also be the totalitarian state. In our western world, the state
is derived from the will of the citizens. Here the state is only a
trustee of the economic subjects. In China, for example, this is
exactly the other way around. There, the state legitimizes from
within itself and the citizens played only a subordinate role. A cash
abolition must not be dispossessive to property regarding to Di
Fabio. Therefore, negative interest rates could be qualified as a
fundamental rights intervention. The state is obliged to preserve its
constitutional values and that includes the right to property.
In the digital domain something would emerge beyond the state, which
would gladly be used for anarchic purposes. But the supporters of the
cash abolition pursued only certain interests of digital companies,
so not necessarily the interests of citizens.
 |
| Discussion panel of the participants (Source: Thomas Seidel) |
During a panel discussion, it has been
mentioned: Cash is not the money of the central banks, it is the
money of the citizens, with which the central banks would have to
handle carefully!
 |
| Martin Hellwig University Bonn (Source: Thomas Seidel) |
Only cash is deleveraging
An academic view at the cash is
provided by Marin Hellwig from the University of Bonn. Cash is simply
the basis of the monetary system. Ultimately, a debtor would have to
pay cash. Hellwig asks, what is the content of a claim if there will
be no cash? Our economic system is based on the law of obligations.
What could replace the cash there? Payments in cash are
debt-discharging and thus final. But it must be accepted. Every
normal business transaction has two participants, the supplier and
the payer. But if there were digital money, one would be dependent on
a third party for the whole transaction, namely the operator of the
payment system. Is that what one want? The importance of cash Hellwig
works out at another example. Emigrants, for example, could not take
digital money with them unhindered. Claims against the state could
not be enforced under private law. Book money is a legal debt, but
cash is not a debt. An essential reason for trust in the central
banks today is their independence. Therefore, Hellwig sees
discussions about a democratization of central banks as problematic.
 |
| Hans-Walter Peters German Bankers Association (Source: Thomas Seidel) |
Watch out for the digital powers
Finally, with Hans-Walter Peters, in
his role as President of the Association of German Banks, again a
banker comes to speak. He opens his talk with a brief report of a
visit to Silicon Valley, California, where he met representatives of
leading American digital companies. There one live in another world.
The digital world knows no state, only a totally networked society.
As a result, in a digital world, cash
will be the loser. Money is and remains first and foremost a matter
of trust. So far, this trust has been related to the question of
whether one can pay with it anywhere and at any time. For digital
payment systems, the question arises as to how a payment process
leaves no digital traces. For all the gladness of the freedom through
cash, cash supply would be increasingly expensive, especially when
compared to digital systems. Although the love of Germans for cash is
already legendary. But as the cost of cash continues to shift to
customers, affection is likely to change.
 |
| Ongoing discussions while coffee break (Source: Thomas Seidel) |
Summary
Many institutions today have a concrete
interest in monitoring citizens as comprehensive as possible. Among
other things, states emphasize security and protection interests, for
example because of terrorism. That the state wants to monitor every
financial transaction, not least because of the tax duties, is not
even mentioned. This is all the more true, for the already quasi
sovereign acting guardians of social systems, the health insurance.
First and foremost, digital companies have a commercial interest in
spying on citizens' living and paying habits as customers. In the
background, however, the omnipotence fantasies of a global,
denationalized society certainly play a role. One seeks, so to speak,
an „investorcracy“. There, under certain circumstances, every
monitored citizen would be simultaneously, at least indirectly, a
supervising investor.
Against this background, it was good
and important to hear at this event from various speakers how
concrete and practical the cash is being used as an direct democratic
instrument every day a million of times. Yes, it even seems to be the
actual flame of freedom. But like any other form of freedom, you have
to fight for it every day. One can only hope that more people, than
the central bankers alone, effectively counteract the abolition of
cash.
 |
| Even for lunch the Hilton Hotel offers a nice atmosphere (Source: Thomas Seidel) |
Keine Kommentare:
Kommentar veröffentlichen