On average, wallets in Germany hold nearly twice as much cash—about $123 worth—as those in Australia, the US, France and Holland, according to a recent Federal Reserve report on how consumers paid for things in seven countries. Roughly 80% of all transactions in Germany are conducted in cash. (In the US, it’s less than 50%.) And cash is the dominant form of payment there even for large transactions.
No one knows precisely why Germans have such a strong preference for cash, though survey data offer some hints. German respondents suggested that using cash makes it easier to keep track of their money and spending [pdf]. [...]
Other responses suggest Germans like the anonymity of cash, in keeping with their general enthusiasm for tightly protecting privacy. [...]
One explanation is that, as researchers have found, memories of hyperinflation have quite a bit of staying power. People in countries that suffered banking crises quite sensibly often prefer to save in cash—though typically in foreign currencies such as US dollars—rather than put money in the bank. (Federal Reserve Bank of New York economists found that demand for US dollars rises for at least a generation in countries after they suffer a searing experience with high inflation.) And countries such as Bulgaria and Romania, which have recent histories of currency instability and financial crises, also are quite heavy users of cash.
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