Exclusive: Germany intensifies emergency cash plans to deal with the blackout

FRANKFURT, Nov 15 (Reuters) – German authorities are stepping up preparations for emergency cash deliveries in the event of a blackout to keep the economy running, four people involved said as the nation prepares for possible power outages. due to the war in Ukraine.

The plans include the Bundesbank, Germany’s central bank, accumulating extra billions to cope with increased demand and possible limits on withdrawals, one of the people said.

Officials and banks are also looking into the distribution, discussing for example priority access to fuel for cash transporters, others said, commenting on preparations that have accelerated in recent weeks after Russia cut gas supplies.

Discussions about planning involve the central bank, its financial market regulator BaFin, and several financial industry associations, the people said, some of whom spoke on condition of anonymity on private and ever-changing plans.

Although German authorities have publicly downplayed the likelihood of a blackout, discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by rising energy costs or even sabotage.

They also highlight the growing ramifications of the war in Ukraine for Germany, which has relied on affordable Russian energy for decades and now faces double-digit inflation and a threat of disruption due to fuel and energy shortages.

Access to cash is a particular concern for Germans, who value the security and anonymity it offers and tend to use it more than other Europeans, with some German marks still piling up replaced by euros more than two decades ago.

About 60% of daily purchases are paid for in cash, according to a recent Bundesbank study which found that Germans, on average, withdraw more than € 6,600 per year mainly from ATMs.

A parliamentary report from a decade ago warned of “discontent” and “aggressive altercations” if citizens were unable to get their hands on cash during a blackout.

There was a cash rush at the start of the pandemic in March 2020, when the Germans withdrew € 20 billion more than they deposited. It was a record and ran smoothly.

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But a potential blackout raises new questions about possible scenarios, and authorities are intensively reviewing the issue as the energy crisis in Europe’s largest economy deepens and winter approaches.

If a blackout occurs, one option for policy makers could be to limit the amount of money withdrawn by individuals, one of the people said.

The Bundesbank processes money that moves through the shops and the German economy, removing the fakes and keeping circulation orderly. Its huge inventory makes it ready for any spike in demand, that person said.

DO NOT SKIP THE LINE

One weakness that planning has highlighted concerns security companies that transport money from the central bank to ATMs and banks.

The industry, which includes Brinks (BCO.N) and Loomis (LOOMIS.ST), is not fully covered by the law guiding priority access to fuel and telecommunications during a blackout, according to industry organization BDGW.

“There are big loopholes,” said Andreas Paulick, director of BDGW. Armored vehicles should queue at gas stations like everyone else, he said.

The organization hosted a meeting last week with central bank officials and lawmakers to take its case forward.

“We have to face the realistic blackout scenario in advance,” said Paulick. “It would be totally naïve not to talk about it at a time like now.”

More than 40% of Germans fear a blackout in the next six months, according to a poll published last week by Funke Mediengruppe.

The German Disaster Office said it recommended that people keep cash at home for such emergencies.

German financial regulators fear banks are not fully prepared for major power outages and see it as a previously unforeseen new risk, an official with first-hand knowledge of the matter said.

Banks consider a large-scale blackout “unlikely”, according to Deutsche Kreditwirtschaft, the umbrella organization of the financial sector. But the banks are still “in contact with the ministries and the competent authorities” to plan such a scenario.

He said finance should be considered a critical infrastructure if energy is rationed.

Sometimes politics can get in the way of blackout planning.

In Frankfurt, the banking capital of Germany, a city council member proposed requiring him to submit a blackout plan by November 17.

The politician, Markus Fuchs of the right-wing AfD party, told the council it would be irresponsible not to plan one. But the other parties rejected the proposal, accusing Fuchs and his party of stirring up panic.

Fuchs later said in a telephone interview: “If we found a solution for world peace, it would be rejected.”

The problem also underscores the dependence of commerce on technology, with increasingly electronic transactions and where most ATMs do not have an emergency power source.

Cash would be the only official payment method that would still work, said Thomas Leitert, head of KomRe, a firm that advises cities on planning for blackouts and other disasters.

“How else will they pay for the ravioli jars and the candles?” Leitert said.

He said he had long warned authorities about the risks of blackouts, but that the planning was inadequate.

Reporting by Tom Sims, Marta Oroszko and John O’Donnell Editing by Tomasz Janowski

Our Standards: Thomson Reuters Trust Principles.

Tom Sims

Thomson Reuters

It covers German finance with a focus on large banks, insurance companies, regulation and financial crime, previous experiences at the Wall Street Journal and the New York Times in Europe and Asia.

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