Johannes Beermann ©Frank Rumpenhorst

Johannes Beermann: Extensive crisis preparedness ensures cash supply

Bundesbank branches can also pay out cash at any time, even in contingency and crisis situations, Bundesbank Executive Board member Johannes Beermann said at a meeting with the press in Frankfurt. At present, the Bundesbank was not expecting events such as power outages in an energy shortage situation, he added. However, according to Mr Beermann, the Executive Board member responsible for cash management, comprehensive risk preparedness measures have put the Bundesbank in a good position to deal with such cases. Yet this was not the only factor: as he put it, “Successful crisis preparedness is predicated on all market agents joining forces to handle contingency and crisis situations in the domestic cash cycle.” Since, he continued, cash was the only means of payment that would also function without technical assistance in an emergency, its property as a fail-safe instrument was very important for the provision of basic services to the general public. The high importance of cash in times of crisis had recently become apparent upon the outbreak of the COVID-19 pandemic. Bundesbank surveys revealed that demand for cash more than quadrupled in March and April 2020.

The Bundesbank’s contingency measures

According to Mr Beermann, the Bundesbank’s branch network comprising a total of 31 branches throughout Germany ensures that a sufficient quantity of high-quality cash can always be provided. This was exemplified by the new Bundesbank’s branch in Dortmund. He added that the Bundesbank had taken extensive contingency measures to safeguard cash payments. As examples, Mr Beermann listed the existence of tried and tested backup procedures for all major IT systems as well as policies to safeguard internal cash logistics. In addition, the branches had sufficient stocks to prepare the Bundesbank for a crisis-related surge in demand for cash at all times. “Against this backdrop, the Bundesbank is not considering restricting cash withdrawals in the event of a crisis, either,” Mr Beermann assured listeners.

The measures would also be in effect with regard to potential energy shortages, he continued, adding that the emergency power supply was sufficient to keep Central Office and all branches up and running even in the event of a power outage. The Bundesbank is regarded by Germany’s Federal Network Agency as part of the critical infrastructure and would, for example, have priority access to power supply in an emergency. According to Mr Beermann, the Bundesbank is continuing to examine its own energy supply and saving measures.

Interplay is necessary

Despite the measures taken in its own sphere of influence, the Bundesbank cannot ensure the direct supply of cash to consumers single-handedly, Mr Beermann said. “The large-scale distribution of banknotes in Germany is the responsibility of the banking industry and the private cash-in-transit companies commissioned by it,” he explained. For this reason, the Bundesbank has joined forces with key cash handlers to establish a joint communication network for contingency and crisis situations. This defines uniform communication structures and comprises all the necessary contact persons: “If the worst comes to the worst, information on the current situation can be exchanged rapidly and in a targeted manner and the next steps agreed,” he said.

The Bundesbank was always looking at new ways of further improving the networked nature of crisis preparedness between individual cash handlers. According to Mr Beermann, the Bundesbank is intensifying its cooperation with the Federal Office for Civil Protection and Disaster Assistance in this context. “In particular, the issue of how to secure the ‘final leg’ of supplying cash to consumers in an emergency is also being examined,” he said. Above and beyond this cooperation, Mr Beermann stressed that the individual crisis plans of all cash handlers, especially those of the individual commercial banks, were of great importance.