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FINANCIAL

EU’s Juncker sees ‘no risk’ of major Italian bank crisis

European Commission head Jean-Claude Juncker said on Wednesday he sees no risk of a major Italian banking crisis, amid fears the lenders are saddled with a mountain of bad debt and need bailing out.

EU's Juncker sees 'no risk' of major Italian bank crisis
Jean-Claude Juncker has said there is no major risk of an Italian banking crisis and stated that EU relationships with Italy were strong. Photo: Frederick Florin/AFP

“I do not see the risk of a major banking crisis” in Italy, Juncker told a press conference when asked about EU relations with Italy which have been strained by several issues, including Rome's efforts to help its troubled banks.

Juncker did not elaborate on his remark about the banks and insisted that while words may have been exchanged with the Italian government, he “loved” the country and all it stood for.
   
“There is no problem between the government and the Commission; there is a debate, with some strong words but there are good working relations,” he said.
   
Italian Prime Minister Matteo Renzi has been at odds with Brussels for several months – firstly over the migrant crisis and efforts to ease the burden on Italy which has borne, along with Greece, the brunt of the refugee arrivals.
   
Renzi has also been pushing for the Commission to cut him some slack to allow him to breach strict EU fiscal rules so that he can spend money on stimulating a weak economy.
   
That line of thinking has pitted Renzi against Germany, the 28-nation bloc's economic powerhouse, which insists the fiscal rules must be scrupulously observed to avoid any repeat of the 2008 financial crash.
   
The pressure has mounted on Rome as global stock markets have tumbled and on Tuesday, the Italian banks were once again in the firing line, posting large losses.
   
The downturn was made worse by fresh data showing non-performing loans hitting record highs, a clear signal that the Italian economy – struggling to recover from a three-year recession – faces another battering.
   
News that the European Central Bank was asking several banks — including Banca Monte dei Paschi di Siena, Banco Popolare and UniCredit – for data on their bad loans fuelled concerns the situation was spiralling out of control.
   
Italian Finance Minister Pier Carlo Padoan insisted there was “no specific concern regarding Italian banks” and the ECB was merely carrying out “a study to identify best practices in the management of non-performing loans.”
   
On Wednesday, the Italian stock market fell again, in line with its European peers.

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.

With reporting by DPA

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