As rates go negative Germans rush to buy safes
Duncan Richardson, News Editor
30 Aug 2016, 12:21 p.m.
Germans are withdrawing their life savings and parking their money in safes at home. Germans are savers by nature and despite interest rates being slashed to zero have continued to save. Historically, Germans deemed savings accounts as safe and secure. Recently, however, many have lost faith.
Following the ECB’s decision to take interest rates below zero, savers now face the real prospect of being charged to deposit money with their bank. In fact, a small German bank in Bavaria has already started to charge customers 0.4% on all balances over 100,000 euros. In a country where few buy stocks and shares the savings landscape has been turn upside down.
Germany’s affinity with cash is largely driven by the desire for privacy and many Germans are spooked by government proposals to ban all cash transactions over 5,000 euros. While others believe the plan to withdraw all 500 euro notes from circulation is the first step towards a cashless society. Nearly 80% of all retail transactions in Germany are conducted in cash compared to 46% in America.
Many Germans would prefer to buy and install a safe than pay a financial institution to hold their money. Germans biggest safe manufacturer has seen sales rise 25% in the first half of 2016. Banks and other financial institutions are also storing money out of the banking system and holding physical cash in large private vaults.