Financial authorities are working on contingency plans for blackouts

DAccording to insiders, Germany’s financial authorities are working on emergency plans for the supply of cash in the event of a long-term power outage due to the gas crisis. the Federal Bank, the financial regulator Bafin and several industry bodies are stepping up their preparations for such an event, four people familiar with the talks said. Part of the plan is to build up cash holdings at the Bundesbank and potentially limit the amount customers can withdraw from their accounts, one insider said. Banks and regulators are also examining potential weaknesses in cash distribution, others said.

Cash continues to play a major role in the German economy. In the event of a power failure, electronic payment systems and ATMs would be out of order. “In the event of a blackout, cash will be the only official means of payment that still works,” estimates Thomas Leitert, CEO of KomRe, which advises cities on how to prepare for power outages and other disasters. In 2011, a report on the consequences of a permanent power outage commissioned by the Bundestag warned that “resentment and sometimes aggressive arguments” could result if the cash supply collapsed. “People are afraid that they will no longer be able to provide themselves with food and other basic necessities,” the report said.

“But how should the ravioli tin be paid for?”

According to insiders, an Achilles’ heel in a crisis is the money transport service providers who bring the cash from the Bundesbank to the bank branches and ATMs. The industry, which includes the likes of Brink’s and Loomis, demands that in a crisis it be assessed as part of critical infrastructure and given priority access to fuel and telecom services. Otherwise you are in the event of a longer one power outage unable to deliver cash. “There are large regulatory gaps in the law,” says the managing director of the Federal Association of German Money and Value Services (BDGW), Andreas Paulick. “We have to deal with the blackout scenario preventively.” The banks in Germany are not sufficiently prepared for such a crisis situation from the point of view of the supervisory authorities, said a representative of the authority, who did not want to be named.

According to a Civey survey conducted in early November, more than 40 percent of the population in Germany fears a blackout in the next six months. The German banking industry (DK) considers a blackout to be unlikely, as the industry association announced when asked by Reuters. However, one is in contact with the authorities on this topic in order to be able to keep financial services running in an emergency. The DK is also committed to ensuring that data centers, cash supply and payment transactions are counted as critical infrastructure.

In the first few months of the corona pandemic, the need for cash suddenly increased: In March 2020, 20 billion euros more cash was withdrawn than deposited in Germany – a record sum for the Deutsche Bundesbank, which is responsible for the cash supply. That went without any problems. According to an insider, the Bundesbank has enough cash in hand in the event of a similar escalation in demand.

However, it is difficult for the authorities to estimate how much cash citizens will actually need if card and online payments fail. Very few citizens had significant amounts of cash, explains KomRe boss Leitert. The average is 120 euros per person. “But how is the ravioli tin or the last pack of candles to be paid for?”

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