By Tom Sims, Marta Orosz and John O’Donnell
FRANKFURT – German authorities are stepping up preparations for emergency cash deliveries in the event of a power outage to keep the economy going, four people involved have said, as the country prepares for possible blackouts. current resulting from the war in Ukraine.
Plans include the Bundesbank, Germany’s central bank, hoarding additional billions to meet increased demand, and possible limits on withdrawals, one of the people said.
Officials and banks are also looking at distribution, for example discussing priority access to fuel for cash carriers, others said, commenting on preparations that have accelerated in recent weeks after Russia limited gas supply.
The planning discussions involve the central bank, its financial markets regulator BaFin and several financial industry associations, said the people, some of whom spoke on condition of anonymity about private and evolving plans.
Although German authorities have publicly downplayed the likelihood of a blackout, the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling blackouts. caused by soaring energy costs or even sabotage.
They also point to the growing ramifications of the war in Ukraine for Germany, which for decades relied on affordable Russian energy and now faces double-digit inflation and the threat of disruption from fuel shortages. fuel and energy.
Access to cash is of particular concern to Germans, who value the security and anonymity it offers, and who tend to use it more than other Europeans, with some still hoarding deutschemarks replaced by euros more than two decades ago.
Around 60% of daily purchases are paid for in cash, according to a recent study by the Bundesbank which found that Germans on average withdraw more than 6,600 euros a year, mainly from ATMs.
A decade ago, a parliamentary report warned of ‘discontent’ and ‘aggressive altercations’ in case citizens could not get their hands on cash in the event of a blackout.
There was a money rush at the start of the pandemic in March 2020, when the Germans withdrew 20 billion euros more than they had deposited. It was a record, and it worked without a hitch.
CHART: German race for cash in crisis (https://graphics.Reuters.com/UKRAINE–CRISIS/jnvwyeggevw/chart.png)
But a potential blackout raises new questions about possible scenarios, and officials are intensively reviewing the issue as the energy crisis in Europe’s largest economy deepens and winter approaches.
If a power outage occurs, one option for policymakers could be to limit the amount of cash withdrawals, one of the people said.
The Bundesbank deals with cash circulating in German shops and the economy, eliminating counterfeits and maintaining an orderly circulation. Its massive inventories make it ready for any spike in demand, this person said.
One of the weaknesses revealed by the planning concerns the security companies that transport money from the central bank to ATMs and banks.
The industry, which includes Brinks and Loomis, is not fully covered by the law governing priority access to fuel and telecommunications during a blackout, according to the industry organization BDGW.
“There are big gaps,” said Andreas Paulick, BDGW director. Armored vehicles should line up at gas stations like everyone else, he said.
The organization held a meeting last week with central bank officials and lawmakers to make its point.
“We have to preemptively tackle the realistic scenario of a blackout,” Paulick said. “It would be totally naive not to talk about it at a time like now.”
More than 40% of Germans fear a power outage within the next six months, according to a poll published last week by Funke Mediengruppe.
Germany’s disaster office said it recommends people keep cash at home for such emergencies.
German financial regulators are concerned that banks are not fully prepared for major power outages and see them as a new, previously unforeseen risk, said an official with direct knowledge of the matter.
The banks consider a large-scale blackout to be “unlikely”, according to the Deutsche Kreditwirtschaft, the umbrella organization for the financial sector. But the banks are nevertheless “in contact with the competent ministries and authorities” to plan for such a scenario.
He said finance should be seen as essential infrastructure if energy is rationed.
Sometimes politics can get in the way of blackout planning.
In Frankfurt, Germany’s banking capital, a city council member offered to ask him to present a ban plan by November 17.
The politician, Markus Fuchs of the right-wing AfD party, told the council it would be irresponsible not to plan one. But other parties rejected the proposal, accusing Fuchs and his party of inciting panic.
Fuchs later said in a telephone interview, “If we found a solution for world peace, it would be rejected.”
The issue also underscores commerce’s dependence on technology, with transactions increasingly electronic and where most ATMs have no backup power source.
Cash would be the only official payment method that would still work, said Thomas Leitert, head of KomRe, a company that advises cities on planning for blackouts and other disasters.
“If not, how will the boxes of ravioli and the candles be paid for?” said Leitert.
He said he had long warned authorities about the risk of blackouts, but the planning was inadequate.