It’s a Thursday on the German island of Rügen, a popular tourist destination on the northeastern coast. The location: an everyday supermarket. On the checkout conveyor belt: bread for toast, two croissants from the bakery and a small lemon tree. How to pay? In cash, of course.

Outside in the parking lot, Sabine Schulz, 63, pushes the shopping cart to her car. "Cash is king," she says. With bills and coins, she always knows what she has at her disposal. Paying by card? "Too stressful," says Schulz, who says she’s in a rush and has to go.

Rügen is considered a stronghold for paper money in Germany, which is already widely known as a cash-obsessed nation. Tourists are often amazed by how attached the islanders are to coins and bills. "If you're going to Rügen, take cash and lots of bread with you!” the Berliner Zeitung in Berlin once wrote.

But cards are also slowly finding their way to Rügen, albeit slowly. Stickers can now be found on the windows and doors of many stores in the tourist town of Binz: "We accept debit card payments." Many restaurants here also accept credit cards now. But that's only "because of the tourists," says a restaurateur who doesn't want to be quoted by name, as if this were a sensitive subject. Though it is clear that the issue is complicated. In a survey conducted by the European Central Bank, 69 percent of Germans said that cash is either important or very important to them, especially older people and people with low incomes and education levels. In Europe, only Austrians appear to have a greater affinity for cash than the Germans.

But that love is being put to the test. Millions of customers suddenly went cashless during the pandemic – and stuck with it. Many young people prefer to pay even small amounts by debit card or mobile phone. The EU is pushing for limits on cash payments, local authorities are issuing debit cards to asylum-seekers and the European Central Bank (ECB) is already working to create a "digital euro." Cash, it seems, is coming under pressure from many different sides.

Many are just accepting it with a shrug of the shoulders. But others view it as the beginning of the end of their financial freedom. Conspiracy theorists see dark forces at work that want to peer into people’s wallets. But even the level-headed are asking themselves if they really want the bank or the government to be able to track their every expenditure. Whether a little secrecy when spending money isn’t also a civil right.

The right-wing extremist Alternative for Germany (AfD) party is using the issue to gain votes and is fighting louder than other political parties for the retention of banknotes and coins. "The other parties have left the issue to the AfD for far too long," laments one banker from Frankfurt, who asks not to be quoted by name.

The AfD – the very party that was founded in opposition to the euro – has just called for a law to be passed stipulating that cash must be accepted in every store. The right-wingers are essentially following in Austria's footsteps. There, the right-wing populist Freedom Parts of Austria (FPÖ) wants to write cash into the constitution.

Influencers like non-fiction writer Marc Friedrich speak of a "war on cash" and argue that the abolition of paper currency is "being vigorously pursued on all fronts." Max Otte, the former AfD candidate to become Germany’s federal president, and the former Degussa CEO Markus Krall, who had close contacts with the conspiracy theorist Heinrich XIII Prince Reuss, who has since been indicted as a suspected right-wing terrorist, also regularly stoke fears of the abolition of cash.

The Beginning of the End

It’s a winter’s day in Bergedorf in the east of Hamburg. An elderly gentleman boards a bus on the X30 line. When the man tries to pull some coins out of his wallet, the bus driver shakes his head. "Payment with card only," he says. A back and forth ensues with a predictable end. The bus drives off and the customer is left standing in Hamburg’s winter weather.

Since January, Hamburg’s public transportation provider HVV has been fully committed to digital payments on its buses. Passengers can still insert coins at the ticket machines, but onboard HVV buses, tickets are only available with a prepaid card that has to be topped up beforehand. No exceptions allowed.

Things got off to a bumpy start: HVV quickly ran out of the smart cards and many elderly residents felt excluded. Most passengers, though, didn’t even notice the shift since only a small minority still purchased their tickets with cash. The transport authority says there was little criticism, though some had initial questions about how it worked. Hamburg isn’t the only city that wants to spare its bus drivers the trouble of having to count change. The cities of Chemnitz and Mainz have also abolished cash payments on buses.

Even those roaming the restaurant scene in Berlin, Cologne or Munich don't always get too far with cash. Increasingly, guests are greeted by a sign at the entrance to establishments: "No Cash."

As is the case at Julia Strasser’s Barista Sistar café in Munich. "It was a conscious business decision," says the owner. She bought the café two years ago and switched from "cash only" to "card or PayPal only." Initially, there were negative reviews on Google, says Strasser, and many potential guests left the café in frustration. But for Strasser, the advantages outweigh the disadvantages. She says that cashless payments are easier to process, sales are transparent and the business doesn’t have to fear robberies or theft by employees. It’s faster, too. "No one has ever been able to give me a rational explanation for why they only pay with cash," she says.

In a recent survey, the Cologne-based EHI Retail Institute found that 35 percent of companies in the retail sector want to push back cash in favor of "non-cash means of payment." Four percent said they were working on banning cash from their stores altogether. Still, 20 percent see so much future in bills and coins that they want to make handling them more efficient.

An increasing number of stores are using machines that count, deposit and dispense change. Employees no longer have to take the cash in their hands. This is more hygienic and can also help prevent employee theft. What’s more, the cash flows are transparent, which also pleases the tax authorities.

Law enforcement officers and tax investigators have been lobbying for maximum cash limits for years. For them, large amounts of cash are an indication of suspicious transactions more than anything. "We often come across lockers full of cash," says Oliver Huth, the state chairman in North Rhine-Westphalia of the Association of German Criminal Investigators. "The cash comes from every crime you can imagine: drug offenses, extortion and money laundering." In some cases, the criminals have to change their money into 500 euro bills because they would otherwise run out of storage space.

If the money has to be taken from the safe deposit box to be laundered abroad, says Huth, organized crime has a number of pathways to choose from. The perpetrators can use it to buy expensive watches or cars and transport the goods across the border, for example. In such cases, investigators have virtually no chance of tracing the money flows. Huth has long campaigned for a cash limit of 10,000 euros, as envisioned in the new EU money laundering rules. "I see no reason why legal transactions over a certain amount should not be concluded with bank money," he says.

Florian Köbler, the national head of the German tax union DSTG, calls the planned cash limit a "game changer" for investigators. Under the rules, criminals would be required to prove that the money comes from legal sources when buying things like luxury goods. Köbler himself is advocating for an upper limit of just 1,000 euros. He says the younger generation tends to use electronic payment methods anyway. It sounds drastic. On the other hand: Italy already has an upper limit of 5,000 euros for cash payments in place.

In view of the risk of corruption and tax evasion, economist Kenneth Rogoff wrote "The Curse of Cash" back in 2016 – a book which proposed a four-point plan to abolish it, using the United States as an example. The large banknotes would disappear first, followed later by the small denominations. At the same time, the state offers all citizens a digital equivalent, such as a bank account or a payment card. New laws would protect privacy on the one hand, but would prevent concealment on the other. In order to avoid payment defaults, transactions would be processed in real-time. Science fiction? For asylum-seekers in Greiz in the eastern state of Thuringia, it has already become reality.

The district made headlines across Germany when it recently introduced a debit card for asylum-seekers living there. Since last December, most of the money distributed to them has been available via a personalized prepaid card with the Mastercard logo. This gives the authorities there control – not only over who receives the money, but also where it is spent. The card is also linked to a postal code.

For asylum-seekers, this means that they can only use the card to make purchases within the district. "This is a massive encroachment into the lives of refugees," says Ellen Könneker of the Thuringian Refugee Council. She says it is often no longer possible for refugees to visit friends in other districts. The district, on the other hand, sees no discrimination, as the card can ultimately be used in an 843-square-kilometer area. Other districts are following suit, and a nationwide regulation that gives the federal states plenty of leeway is in the works. Bavaria wants to restrict the sectors for which the debit card may be used – excluding things like online shopping, gambling or money transfers abroad.

The Initiative New Social Market Economy (INSM), an employers’ lobby group, also wants to force people in Germany receiving welfare benefits who could be working to use a similar card. INSM Managing Director Thorsten Alsleben demands: "State benefits should only be provided through a debit card to create greater incentive to take up employment." Maximilian Mörseburg, a member of the German federal parliament from Stuttgart, also views using debit cards for recipients of welfare payments as a way of preventing misuse of the social welfare system.

But why stop at welfare recipients? It doesn't take much imagination to picture a debit card for recipients of student aid and loans, for pension benefits or for recipients of sick pay benefits. And are child benefits actually spent on children in the end?

The Defenders of Cash

Urs Dietrich believes things are going too far. "Cash is freedom," says the 30-year-old cellist, who studies music at the Folkwang University of the Arts in the city of Essen and prefers to pay for his everyday expenses with cash as a matter of principle. What bothers him is the very thing that apparently delights criminologists and politicians: the possibility of surveillance. He says it’s nobody’s business where he buys his gasoline.

Dietrich is concerned about more than just the potential loss of privacy – he also worries about the loss of a bit of culture. "When I get 200 euros for a performance, then I know exactly what I've achieved," he says. Dietrich saved up the deposit for his wedding rings, bill by bill. "It was special for me to actually hold the money in my hand."

Andreas Spinkler manages the German business of Coinstar, a company the operates coin counting and conversion machines. Customers tip their collected change into the company’s vending machines and, after deducting a fee of just under 10 percent, they receive shopping vouchers that they can redeem immediately. The company’s coin counting kiosks have been present in Germany since 2016, and there are now more than 2,500 of them in the country, significantly more than in Italy or Spain, where Coinstar launched at the same time.

"At some locations in Germany, I have placed three machines next to each other – in socially disadvantaged districts in Berlin or Hamburg, for example," says Spinkler. He adds that people in those areas sometimes receive part of their wages in cash. "If you have to be careful with your spending, cash payments are easier to handle," says Spinkler. He says the Coinstar machines aren’t as popular in expensive neighborhoods. "Only poorer people have to empty their coin jar sometimes."

Frank Schäffler is also an avowed fan of cash. If you ask him about it, he immediately pulls out his mobile phone case, which contains several bills. In a speech before the German parliament, he referred to cash as "an element of freedom minted in coins."

The politician, a member of the business-friendly Free Democratic Party (FDP), has never held an important office in his party, but he has nonetheless achieved some prominence. During the euro crisis, Schäffler became the most vocal opponent of financial aid for countries such as Greece, Portugal and Cyprus – whose bailouts his party supported in the end. "That’s when it became clear to me how easily the state can restrict access to bank deposits," he says. At the peak of the crisis, Cypriot banks were temporarily closed and only allowed small withdrawals from ATMs, but the German central bank, the Bundesbank, still had to send the country billions in euro notes by secret flight. "People could only withdraw 100 euros a day from ATM machines," recalls Schäffler, who happened to be in Cyprus at the time.

Today, the FDP member is one of the few politicians in the current federal government coalition to speak out publicly in the debate over the future of cash. He also supported the ban on cash payments for property purchases that was agreed to in the contract forming the coalition government. However, he rejects upper limits on cash transactions in other areas.

FDP party leader and German Finance Minister Christian Lindner also considers the limit on cash spending to be an "unnecessary restriction of freedom," whereas Interior Minister Nancy Faeser of the center-left Social Democratic Party (SPD) campaigned for the limit in view of the risk of money laundering. Germany abstained in the European Council vote on the corresponding legislative package – but the EU regulation will still go into effect in Germany. It is expected that it will be approved this summer, but it could take years before it is fully implemented, sources in Berlin say.

A Rapid Decline

Ultimately, dark forces might not even be needed to abolish cash. According to estimates, the average German still has around 100 euros in their wallet, but the share of cash payments is declining rapidly. According to a recent survey taken by Postbank, one in three Germans say they could come to terms with the abolition of bills and coins – in the 18-to-39 age group, the figure is 57 percent.

Meanwhile, the Bundesbank has come to the conclusion that the acceptance of cash may no longer be guaranteed in the coming decade. The euro watchdogs had futurists draw up three scenarios. In the first one, cash has practically disappeared from people's everyday lives. As a result of the growing number of consumers paying digitally, there are few bank branches and ATMs left in Germany. Even withdrawing money at the checkout counter at stores no longer works because so few customers are paying with cash.

In the second scenario, there are still some cash users, but there are so few that more and more ATMs and bank branches are disappearing. According to the futurists, in this scenario, the cash is "creeping out."

There is only one scenario in which cash can really hold its own. In this scenario, politicians adopt countermeasures to ensure that the population rediscovers the advantages of cash. But is there anymore to that than wishful thinking? The scenarios are not forecasts, just possible developments, says Burkhard Balz, a member of the Bundesbank's board. "Our future study shows that the preservation of cash is not self-evident," he says. The Bundesbank has the task of ensuring that cash continues to circulate effectively in Germany, says Balz. "That's why we want to take countermeasures now, before it’s possibly too late," he says. A National Cash Forum has been tasked with preparing initiatives to stabilize the circulation of cash.

In the German financial capital of Frankfurt, people are already working on the cash of the future. The ECB is currently exploring the possible uses of a digital euro with project tenders worth a total of several hundred million euros. The aim is to create a digital form of money with which users can pay easily and, if possible, anonymously – and this should also be free of charge for private individuals. Many details still haven’t been addressed. What is clear, though, is that the public will receive an additional account specifically for the digital euro. The digital currency is intended to be Europe’s answer to American payment service providers like Visa, Mastercard and PayPal and could be launched in 2027.