Why do the Germans still worship cash?

Five charts to start your day

There is a reason why governments don't really like cash. Well, most of them don't. I would say that the Swiss are the exception. I remember a while back, two representatives of Swiss parliament made a case for introducing a 5,000 franc note to defend freedom. I know that sounds strange, but to many of us here, this didn't sound that strange. You have to understand the history of this country.

Cash isn't very traceable. There are no records of how it has flowed through the economic system, or what transactions it has been used for, whether legal or illegal. This means that it's useful for money laundering and evading taxes. Now admittedly, banking secrecy is a thing of the past in Switzerland and good riddance. But there are still shadows of it left.

Moreover, it would be a mistake to assume that Switzerland has been alone in this past endeavour and obsession with cash. The Germans have a similar obsession.

There was a very interesting article in Bloomberg about the new Digital Euro. I was totally taken aback because I didn't actually know about this. But I couldn't help but smile. Of course, they are launching a digital currency. You see, the only alternative to maintaining your privacy if you can't do it with cash is cryptocurrency, which can effectively mask your identity and let you potentially evade tax, money launder and transact in criminal activity.

The solution most central banks have come up with is to create a digital currency that is still traceable, plus allows them a degree of monetary control over its supply. The article didn't really cover this point, but it did produce a great series of charts that show just how much resistance there could be to this change. Cash, for now, is still king.

Source: Bloomberg

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