Germany steps up emergency cash plans to cope in blackout

German authorities have intensified preparations for emergency cash delivery in case of a blackout to maintain the economy's operation, four people familiar with the matter said. This is as the country prepares for possible power outages due to the conflict in Ukraine.

One person said that the plans included the Bundesbank, Germany’s central bank, hoarding additional billions to deal with an increase in demand and possibly limiting withdrawals.

Officials and banks are also examining distribution. They discuss for example priority fuel access for cash-transporters. This is in response to Russia's recent gas supply cuts.

According to the people, the central bank, BaFin, the financial market regulator, and several financial industry associations are involved in the planning discussions. Some spoke under condition of anonymity because of plans that are confidential and still in flux.

Although the German authorities have not publicly dismissed the possibility of a blackout occurring, these discussions reveal how serious they take the threat as well as how difficult it is for them to plan for possible crippling power outages due to soaring energy prices or sabotage.

These also highlight the broader ramifications that the Ukraine war has on Germany. Germany, which for decades relied heavily on Russian energy, now faces inflation of double-digits and the threat of disruption due to fuel and energy shortages.

Germans are particularly concerned about cash access. They value its anonymity and security, and tend to use it more often than other Europeans. Some still have Deutschmarks that were replaced by euros over two decades ago.

According to a Bundesbank study, roughly 60% of daily purchases are made in cash. The study found that the majority of Germans withdraw more than 6,600 euros each year, mainly from cash machines.

A decade ago, a parliamentary report warned of "discontent and aggressive altercations" if citizens couldn't get cash during a blackout.

At the outbreak of the pandemic, in March 2020, there was a rush to cash. Germans drew 20 million more euros than they had deposited. This was a record and it went without a hitch.

However, a possible blackout raises questions about the possibility of a situation. Officials are reexamining the issue as winter approaches and the energy crisis in Europe's largest country deepens.

One person said that policymakers might limit cash withdrawals if there is a blackout.

The Bundesbank is responsible for processing cash flowing through Germany's economy and shops. It also removes fakes from circulation and keeps it orderly. According to this person, its huge stocks allow it to be ready for any surge in demand.

NO JUMPING THE LIE

Planning exposed one weakness: security firms that transport money between the central bank and ATMs and banks.

According to the industry association BDGW, this industry includes Brinks and Loomis .

Andreas Paulick (director of BDGW) said that there are "big loopholes". He said that armoured vehicles would need to line up at petrol stations just like other vehicles.

Last week, the organization held a meeting with lawmakers and central bank officials to push its case.

Paulick said: "We must preventively address the realistic scenario of an outage. It would be foolish to not speak about it at this time."

Funke Mediengruppe published a survey last week that found more than 40% of Germans are concerned about a blackout within the next six-months.

According to Germany's disaster bureau, it recommends that people have cash at home in case of an emergency.

According to a source with direct knowledge, German financial regulators are concerned that banks are not adequately prepared for major power outages.

According to Deutsche Kreditwirtschaft (the umbrella organization for the financial sector), banks consider a complete blackout "improbable". However, banks are still in contact with relevant ministries and authorities to plan for such an event.

If energy is not rationed, finance should be considered critical infrastructure.

Sometimes politics can get in way of planning.

One member of Frankfurt's city council proposed that it present a blackout plan no later than 17 November in Germany's banking capital.

Markus Fuchs, a right-wing politician from the AfD party, said that it would be irresponsible to not plan for one. The proposal was rejected by the other parties, who accused Fuchs and his party inciting panic.

Fuchs stated later in a telephone interview that he would reject a solution to world peace if he found one.

This issue also highlights the dependence on technology in commerce, as transactions are increasingly electronic and cash machines don't have an emergency power source.

Cash would be the only valid official payment method, according to Thomas Leitert, chief executive of KomRe which advises cities about planning for blackouts or other disasters.

"How else can the ravioli cans or candles be paid for?" Leitert said.

He stated that he had been warning authorities about blackout risks for a long time, but that his planning was not adequate.

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