Germany increases emergency fund to cope with energy crisis

German authorities have stepped up preparations for an emergency fund in case of an energy crisis, as the country prepares for possible blackouts caused by the war in Ukraine.

The plans include committing the Bundesbank to raise billions of euros to cope with an increase in demand and possible restrictions in the event of withdrawals.

The discussions also involve the financial market regulator BaFin and numerous associations in the finance industry.

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

They also underscore the growing consequences of the Ukraine war for Germany, which for decades has relied on affordable Russian energy and now faces double-digit inflation and a threat of disruption from fuel and energy shortages.

Access to cash is a particular concern for Germans, who value the security and anonymity it provides, and who tend to use it more than other Europeans.

Approximately 60 percent of daily purchases are paid for in cash, with an average withdrawal of more than 6,600 euros per year.