Once again, Jens Weidmann has taken a stand against his peers at the European Central Bank. This time it’s over the future of cash.
At a press conference in Frankfurt on Wednesday, Jens Weidmann, the president of the Bundesbank, had intended to focus on the profits of Germany’s central bank, which had increased slightly to just under €3.2 billion ($3.53 billion) in 2015. The increase was mainly attributable to a reduction in reserves set aside for financial risks.
But the Bundesbank’s own finances quickly faded into the background when he was asked his thoughts on the European Central Bank’s plans to phase out €500 bills. Mr. Weidmann, who has loudly protested many of the ECB’s aggressive efforts to bolster the euro zone over the last few years, left no doubt about where he stood on cash, too.
It has proven an extremely emotional issue in Germany over the last few weeks – ever since Deutsche Bank’s chief executive, John Cryan, predicted the death of cash in a decade and news emerged that politicians are considering limiting cash transactions. For many households in Europe’s largest economy, which still relies more on cash for daily purchases than any other E.U. country, the debate has been about fundamental freedoms.
Few people are calling for a complete end to bills and coins. Still, many policymakers see upper limits on cash payments or eliminating the €500 bill as a first step in that direction. The European Central Bank last week acknowledged it is considering phasing out the €500 bill across the 19-nation euro zone.
The push to limit cash has in part to do with the difficult economic situation worldwide, Mr. Weidmann said, which has encouraged experts to start thinking about how to create more leeway for monetary policy.
But Mr. Weidmann warned this could send the wrong message: “It would be fatal if the public received the impression that the goal is to abolish cash.”