johannes beermann : heads and tails - cash in the age of digitalisation dinner speech by dr johannes beermann, member of the executive board of the deutsche bundesbank, at the international cash conference, munich, 10 september 2019. * * * introduction ladies and gentlemen, welcome to the seehaus right at the heart of the english garden. this park is a true landmark of the city of munich, with a design inspired by british landscape architecture. it probably comes as no surprise that football – another at least originally english pastime – is popular around here as well. of course, “ kicking a ball ” with friends in a park such as the english garden is a more informal affair than the matches you might see in the professional football leagues, where the stakes are arguably much higher. but the basic principles of football apply everywhere. the direction of play is the first decision to be made before any match can begin. depending on the position of the sun or the direction of the wind, the choice of which goal to defend first could make a difference to the game ’ s outcome. a neutral mechanism needs to be put in place to decide who obtains this “ first mover advantage ”. a coin toss is one such mechanism. the coin is considered “ fair ” if both events – the coin landing on heads or the coin landing on tails – have an equal probability of occurring. in the history of minting, heads on the obverse and tails on the reverse have emerged as the two sides shown on coins which serve as legal tender. although the details on each side differ at first sight, they are closely related. to “ coin ” a well - known expression, heads and tails are literally two sides of the same coin. together, they complete the coin, which also means both sides have to be taken into consideration. in the world of payments, that is precisely what central banks do. on the one hand, we provide payment systems that function purely electronically while, on the other hand, we take part in the production and distribution of physical cash. in the prevailing set - up, one aspect of payments cannot work without the other. digital payments are in a state of flux. new competitors enter the market, at times trying to disrupt existing structures. the direction of play remains unclear at this stage. it may be that the rise of one form of digital payment will lead to the fall of another. it is also possible that physical cash is used to a lesser and lesser extent until it effectively fades

till now, been a blank spot on the map of the bundesbank ’ s representative network. and as for the question of whereabouts in africa to base our bundesbank representative, there ’ s simply no getting round south africa – the most developed economy in africa, a country that boasts abundant natural resources, and the only african member country of the g20. your country is fertile ground for the private sector. it has a diversified industry and a wellregulated financial sector with a recognised and independent central bank. because of your ability to promote political and economic stability in southern africa, german companies use your country as a springboard into the african market, notably into the countries of the southern african development community. today sees the deutsche bundesbank introduce its first representative to south africa. my visit to celebrate this event is not just an acknowledgement, on the part of the bundesbank, of the economic importance and potential of south africa. it also marks the advent of a frequent exchange of information on financial and monetary policy issues with the aim of better understanding the economic and financial interests of each country and of facilitating dialogue in international forums. within this broader objective, the deutsche bundesbank and the south african reserve bank intend to cooperate closely for the purpose of promoting capacity building by each party and of supporting the formulation of policy in both countries. to this end, on 28 february 2016 the south african reserve bank, represented by deputy governor mminele, and the bundesbank, represented by me, signed at the g20 meeting in shanghai a memorandum of understanding defining the scope of a cross - border cooperation between our two central banks. we will start by jointly undertaking two research projects : one that aims at exchanging best practices in bank stress testing, and another where we will explore how to cooperate more closely on g20 issues. and that is yet another reason why it is beneficial for our representative not to be located too far away from the sarb. on that note, i am delighted that the bundesbank is today presenting ms jenny kilp as its first representative to south africa. ms kilp graduated from liebig university in gießen with a diploma in economics, and after gathering several years of experience in the academic world, joined the deutsche bundesbank in 2004. since then, ms kilp has been an expert in the bundesbank ’ s directorate general financial stability, where she was in charge of policy issues regarding the international monetary fund ( imf ).