When Corona met the world of finances.

For just over 6 months, everyone has heard just how much the present situation has harmed the world economy. However, the reality of the situation only feels real once your favourite coffee shop around the corner has closed down. But how much has the virus actually affected the financial world and how much has the pandemic already affected us?

Financial Crisis 2020?

The global financial crisis of 2008 was the result of too much pressure on the unstable economy at the time. The last drop before the flood was triggered by the real estate sector and the loss of confidence in the financial world.
In the current situation, however, things are starting to look somewhat different. According to the IFO Institute, there is somewhat of a supply and demand from the shock of the pandemic.
This means that many goods could not be produced due to health and safety reasons, and at the same time could not be bought due to the limited possibilities of shopping. One can say that many areas of consumer consumption were not stagnant, but merely postponed. As a result, economists assumed that there would be a quick recovery of the economy. Of course this may only happen as long as the virus can be contained somewhat quickly without many cases of redundancies or bankruptcy. Another extraordinary effect of the pandemic may also be seen at our local grocer when we pay for our goods.

‘’With card, please.’’

And this is for the germans who prefer to pay with card rather than cash.
In 2018 in Germany, over 76% of retail purchases were still paid with cash. In general, there still seems to be an unspoken rule of paying small amounts with cash, and larger amounts with card, because the largest sums of money flow digitally.

The German banking industry announced in mid-April that it would change the limit of the contactless payment method from €25 to €50 for health, safety and hygienic reasons. The data from a survey conducted by the Association of German Banks show us that this was a good measure to be taken. This survey also showed that 26% of those questioned deliberately refrained from using cash during the corona crisis. As one can imagine, the number of cash payments increases with age. Nevertheless, 24% of those over 60 started showing a preference of rather paying with card.

So, if there is anything positive to learn from the current situation, it is that changes in society are possible – even if it cannot be achieved overnight. We have to understand that contactless payment has many advantages, especially at present. Besides the high cost of printing, storage and the transportation of cash, the fear of contracting the virus is great. The trend toward cashless payment methods is therefore steadily developing into a permanent feature of our everyday lives.