Germany’s Cash Culture: “Geld stinkt nicht”

In Germany, Cash is King

North Americans are often frustrated by the lack of credit card acceptance in Germany. Americans and Canadians, so used to paying with plastic, are dismayed to discover that once they stray from the tourist circuit, their AmEx, MasterCard, or Visa credit cards are often useless in German-speaking Europe. It’s another cultural difference, and it’s not a minor one. You need to wrap your head around the fact that cash is king in Germany, Austria, and Switzerland. As the Germans say, “Geld stinkt nicht.” (“There’s nothing wrong with money.” lit., “Money doesn’t stink.”)

Euro banknotes

Euro banknotes range from five to 500 euros. Notice that, unlike US bills, euro banknotes also vary in size. PHOTO: ECB

The Bundesbank, Germany’s central bank, recently estimated that 79 percent of financial transactions in Germany are settled in cash, while in Britain and the USA that figure is under 50 percent. A typical German walks around with the equivalent of about $123 in cash in their wallet, nearly twice as much as Australians, Americans, the French or the Dutch typically carry. There is little talk of a “cashless society” in German-speaking Europe.

Many people have searched for an answer to why Germans (and the Swiss and Austrians) are so much more in love with cash (Bargeld) than most other nationalities. The use of cash for most transactions seems to be deeply ingrained in the German psyche. Children grow up in Germany’s cash culture, and as adults they think nothing of paying a bill of 500 euros or more with paper money. And they can do that with a single banknote, the 500-euro bill that was created as a concession to Germany to ease the pain of giving up the Deutsche Mark (DM). The 500-euro note, worth about $570 today, replaced the popular 1000-DM bill. Switzerland still has its 1000-franc (CHF) banknote, the largest denomination bill in the world, and today worth just a little over 1000 US dollars. We’ll discuss more aspects of these giant banknotes below.

Possible reasons for the German passion for cash vary from the German love of privacy and anonymity to the historic encounters with hyperinflation in the Weimar era, and after World War II. Germans also claim that by using cash, they are better able to keep track of their finances and avoid debt. (The German love of using cash is countered by an intense hate for debt.) Other observers claim cash offers a good way for Germans to avoid taxes with off-the-books cash transactions. Continue reading

A 400-pound gorilla named Germany

Anyone who has followed the evolution of Germany and the European Union for as long as I have may be forgiven for thinking that Germany would always be the EU’s biggest supporter – in more ways than one. But lately, there have been signs that the gradual progression from the old Common Market of the 1960s to the EU and eventually on to a United States of Europe may be a much bumpier road than many once thought.

In the past, German policy regarding the EU reflected Germany’s history and the destruction of Europe caused by Nazi Germany. Along with the rest of Europe, German leaders realized that a unified Europe would help avoid the national conflicts that had so often led to European wars of conquest from ancient times on into the 20th century. In 1952, post-World War II German guilt and common sense led to the establishment of the European Coal and Steel Community (ECSC) by six countries: Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. That modest beginning would lead to the “Common Market” (Treaty of Rome, 1958) and the European Community (EC) in 1967. By 1993, only a few years after German reunification, the 12 EC countries formed the more robust European Union (EU). Today the EU has 27 member states with a total population of about 500 million. Continue reading