German plan to impose limit on cash transactions met with fierce resistance

A plan to introduce a limit on cash transactions in Germany has been met with fierce resistance across the country.

Proposals to ban cash payments of more than €5,000 (£3,860) to combat money laundering and the financing of terrorism were revealed by the German finance ministry last week. They face opposition from a broad alliance of political parties as well as the country’s bestselling newspaper.

The Bild published an open letter on Monday entitled “hands off our cash”, which, in keeping with the analogue theme, it encourages readers to sign, cut out and post to the finance minister, Wolfgang Schäuble.

Political groups ranging from the Green party to the liberal Free Democrats to rightwing Alternative für Deutschland have condemned the proposed measures, which also include a ban on €500 notes, as an attack on data protection and privacy.

“Cash allows us to remain anonymous during day-to-day transactions. In a constitutional democracy, that is a freedom that has to be defended,” tweeted the Green MP Konstantin von Notz.

The head of Germany’s central bank, Jens Weidmann, has distanced himself from the government’s proposals, telling Bild: “It would be fatal if citizens got the impression that cash is being gradually taken away from them.”

Cash transaction limits are common in most other EU countries. In France, the limit was lowered from €3,000 to €1,000 last September; in Italy it was lowered to €999.99 in 2011 but raised back up to €2,999.99 under the current government.

In Germany, such measures clash with deeply engrained habits and social attitudes. According to a recent Bundesbank study, 79% of payments in Germany are made in cash – compared with only 48% in Britain. Even among 14- to 24-year-olds, two-thirds say they prefer paying in cash to electronic means. In a YouGov survey, 72% of Germans said they considered it safer to pay in cash.

Contactless payments are rare in Germany, though a trial of the technology will take place in the Hesse region in the autumn.

Whether a limit on cash transactions would be an effective weapon in the fight against the illegal market remains open to debate. The economist Friedrich Schneider of Linz University told Die Zeit newspaper that even a ban on cash transactions would reduce illegal labour by only 2-3%.