While Europe has been scrambling to import more liquid natural gas, shore up its oil supply, and lift bans on certain activities like fracking and burning trash in homes, in an effort to prepare for what is expected to be a bleak and cold winter, German authorities have also been preparing for angry mobs and the possibility of a run on banks as things worsen.
With blackouts expected over the coming winter months as Europe's energy crisis worsens and the continent runs low on LNG and electricity, the German government has switched its focus from how to prevent blackouts and an energy crisis to concerns about what will happen when the lights go out. One of the main concerns is how to get cash to citizens to keep the economy operating. Bundesbank has been hoarding billions of extra euros in order to handle increased demand and "limits on withdrawals" are also being considered to ensure that there is enough cash to go around.
Other possible solutions include things like money-printing and distributing what cash is available including giving priority access to fuel to people transporting money. Those making contingency plans include the central bank Ba Fin which is the central bank's financial market regulator, and numerous other organizations in the financial industry.
According to a recent study conducted by Bundesbank, approximately 60 percent of typical German purchases are paid for with cash. Additionally, a decade-old parliamentary report showed that Germans are likely to express "discontent" and engage in "aggressive altercations" in a situation where citizens are not able to access their cash. Add that report's findings with the likelihood of blackouts this winter and German society might not survive to see spring.
Germans did not handle the start of the pandemic well withdrawing 20 billion more euros in March 2020 than what they deposited. Seeing the effects of the pandemic is certainly enough to concern the German government about a potential winter without electricity and easy access to cash.
With more than 40 percent of Germans expecting a blackout within the next 6 months, tensions and nerves are high as German authorities and financial institutions race to find ways to calm nerves and keep cash flowing in the dark.
Subscribe to our evening newsletter to stay informed during these challenging times!!