What’s Really Driving The End-Of-Cash Clamor

The temptation to get rid of coins and paper bills is evidence of the failure of the monetary policy of central banks, which has led to negative interest rates.

The future?
The future?
Henri Bourguinat

PARIS â€" It is a sign of changing times that we talk not just about the decline, but the complete disappearance of cash.

With the exception perhaps of the coins needed to unlock supermarket carts, it's clear that everything will be paid by check, or more often with the magical rectangles we call credit cards. Paying in cash is already perceived as tacky and outdated. Our beloved bills and coins, it would seem, are on the way out.

This is understandable given the convenience and increasing speed of our digital society. Still, one can't help feeling a bit put off when the bank says that because of ATMs, it no longer has to offer counter service; or when the head of the International Monetary Fund, Christine Lagarde, makes a plug for the "cashless society" of tomorrow, as she did in January at the World Economic Forum in Davos.

Lagarde's call was echoed by French Finance Minister Michel Sapin, who said the elimination of cash would help the European Central Bank (ECB) gain better control over inflation. There's also the argument that cutting cash would save on the cost of tracking down counterfeit money or installing expensive ATMs, while at the same time undermining illicit activities such as drug trafficking, prostitution, arms dealing, tax evasion and off-the-books work.

And yet there's more to this than convenience or simple economics. The real reason people are calling for an end of cash is that current monetary policy has run its course.

From 2010 to 2014, the United States, with its famous "quantitative easing" (QE) strategy, flooded the market with liquidity ($3.5 trillion). Since then, the ECB, by generously accepting all obligations and long-term securities to be provided through European banks, has done the same thing â€" to the tune of some 1.5 trillion euros ($1.6 trillion). ECB President Mario Draghi has now go even further, with Thursday's major new stimulus plan.

Unfortunately, though, the excess in monetary liquidity has proven ineffective. While the U.S. backs off QE, Europe is opening the floodgates wider still. With its interest rates all the way down to 0%, we're seeing negative rates. Already, out of the 9 trillion euros worth of bonds issued by EU countries, 2 trillion have negative rates. Everywhere, people are taking on debt not just at zero cost. They're actually getting paid to do it.

Herein lies the problem. Negative interest rates are no longer relevant signals for resource allocation: They reinforce the addiction to debt and penalize the investor, all the while without driving the real economy.

This is where the anti-cash crusade makes sense. With cash, the population has a remedy. People who keep their cash may not earn anything, but at least they don't have to pay to keep it in the bank. It's a refuge that, like gold, is inconvenient to store but isn't penalized by deposit rates.

The modernists tout digitalization, therefore, as a way to avoid all of that. Money could be stored in digital form and all payments made electronically. Such exchanges could even be done without intermediaries, with tools such as the "block chain" database we heard so much about in Davos.

But before jumping on the anti-cash bandwagon, there is a major caveat people should keep in mind: a cash-less society will give policymakers the means to control the entire system. For a hint of what that could imply, consider the recent blocking of cash withdrawals in Greece.

We're better off letting cash take its own course. Meddling with it could further encourage negative rates and ultimately, if we're not careful, undermine confidence in the currency, which is something no one wants.

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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