„POWER of DISPOSAL“ in Der-Bank-Blog

Cash, book money and free availability

by JOCHEN WERNE published in DER BANK BLOG (30 October 2020) – For the original version in German please follow this LINK – English version translated by Deepl.com

“Disposal power” or “authority to dispose” are legal terms which are of great importance in the discussions on cash and book money. It also concerns the freedom of choice of citizens.
The German language today is much more extensive than the 100,000 words used by Goethe in his time. We hardly use many of these words, which are so characteristic of our language, despite their meaning. Perhaps some readers feel the same way about the word “Verfügungsmacht” as I did when I consciously read it for the first time in a quotation from the former president of the Federal Constitutional Court, Prof. Dr. Udo Di Fabio. And perhaps it is like with many things in life that one only realises the deeper meaning at the moment when one deals with it in more detail.
In our modern times, hardly anyone will visit the university library to quickly get to grips with a topic. Instead, people google the library to get an overview. And while less than 20 years ago we would have found our first little research happiness about the term “power of disposal” or also “authority to dispose of property” in the library of the law faculty, Internet research reveals in seconds a glance at a litany of legal forums.


Definition of power of disposal
What is striking here is that the focus is not on the definition of control, but that the topic of regaining control dominates the first page on Google. Inevitably, this reminds me of my first visit to the Munich Google office many years ago. Almost rapturously in his remarks about the power of the algorithm, a sales employee of the world’s most powerful search engine asked the group if we knew where on the Internet they hid a body. With a glance into his head-shaking auditorium, he solved the riddle with a smile and said: “On the second page of Google search. Inevitably, of course, one then asks oneself – albeit only rhetorically – whether the Google business model works in particular because many have simply relinquished control over their data.
The power of disposal or also power of disposition is defined as the “legal power to dispose of an object”. Which is banal, meaning that I should also have the power of disposal over what belongs to me – in other words, what is legally my property. However, the success of my own research on the first Google page suggests one thing above all else to the reader: that the power to dispose of property can be lost. For example, also of your own money? In order to answer this question, one should basically distinguish between cash and book money.


Cash, book money and the power of disposal
With cash, I have direct unlimited physical control over my money in the form of coins or notes. This power of disposal can of course be lost if I am robbed or simply lose my wallet. Without entering into the legal depths of “normal” debt and the right to dispose of money, citizens have in principle all the means guaranteed by the state at their disposal to recover their property.
The same applies to book money, if, for example, money is lost through credit card fraud when shopping online. The limits of non-physical power of disposal would, however, quickly become apparent if a bank went bankrupt and the money parked in the account in excess of the deposit guarantee was no longer available.
Cash, book money and free availability
It is utopian and not at all sensible to hoard all one’s “money” as cash. But it is certainly important to make clear what it means to no longer have the freedom of choice between cash and book money and thus to completely give up one’s right to physical availability of money.
In the concluding sentence of his speech at the 2018 Cash Symposium of the Deutsche Bundesbank, Udo Di Fabio underlined what is probably the most important point in the current discussion surrounding this election. He said that it should not be “disregarded” in principle that every citizen should be able to freely dispose of his money – his “exchangeable assets”. He further added that this was particularly true when “financial privacy” was considered a legal requirement.
This means that a society whose entire assets would only be managed digitally in book money could also only exercise limited individual power of disposal over its money and would have to face the question “whether the state, through its central bank, would be entitled to carry out a controlled devaluation through negative interest rates, booking discounts or fees on credit balances”. Prof. Di Fabio further points out that this would then not only be an encroachment on ownership but, as a result, possibly also the imposition of a special levy, which is only permitted under strict conditions in the German legal system.


Conflicts of interest and trust
It is easy to see that this issue can give rise to considerable conflicts of interest in the triangular relationship between citizens (- how can I protect and increase my money), government (- how can public debt be reduced) and central bank (- how can economic and monetary stability be ensured). This is particularly true in the light of the continuing challenges posed by the Corona pandemic.
It is thanks to the excellent work of the Deutsche Bundesbank since the Federal Republic of Germany came into existence and the confidence it has built up in our currency that the confidence of the public in both cash and book money is so high in this country.
Freedom of choice between cash and book money
Of course, another decisive aspect of this trust is the freedom of choice between cash and book money, which the Bundesbank also advocates. This freedom of choice also offers banks the opportunity to deal flexibly with the funds. For example, instead of charging 100 percent negative interest on book money to citizens or companies, banks could also physically hold it or have it held in safekeeping as cash.
Since it is not part of a bank’s core competence to operate high-security systems and one certainly does not want to expose one’s own employees to the risk of a robbery or the blackmailing abduction of a family member, there is of course the possibility of outsourcing such a service in a LCR-compatible and MaRisk-compliant manner. A service that supports the customer in parts of his liquidity management and does not make it difficult for him to possibly maintain his own safe in his own four walls and without a security concept and thus endanger himself and his family.
“Money is coined freedom”
In his prose work “Records from a House of the Dead”, the Russian writer Fyodor Mikhailovich Dostoevsky describes his own experiences in Siberian captivity and formulates the later much quoted sentence: “Money is coined freedom”, thereby describing the vital relevance of a free exchange of goods in an unfree environment – and this through coined cash money. For the young Dostoyevsky, the changeover to a pure book money system in Siberian prison would have meant the withdrawal of his individual power of disposal over money, so that in reverse he would no longer have any assets which he could have used for the exchange of goods and other things. He describes this situation in the quintessence as follows: The suffering of prisoners who do not have money is “10 times greater”.
It is therefore reasonable to assume that the intellectual, serious discussions about the freedom of choice between cash and book money and the freedom of citizens in a constitutional state, which is freely consolidated in its constitution, would please Dostoevsky with his experiences in an unfree society. And it is characteristic of our open society that, especially in a crisis like the present one, we are conducting and continuing the debate on freedom of choice and power of disposal at this level, and not only with regard to our money.

Publication: The nature of society: Are certain cultures less predisposed to cyberthreats than others?

An examination using the example of Germany

Author: Jochen Werne

Published: Werne, Jochen (2019, December 1). The nature of society: Are certain cultures less predisposed to cyberthreats than others? An examination using the example of Germany. In the Cyber Security: A Peer-Reviewed Journal, Volume 3, Issue 2.

ABSTRACT

Successful ransomware attacks and thefts of data and passwords have unequivocally demonstrated that technical defensive measures are to be considered as merely basic moves in the protection against cyberattacks, and that security concepts, if to be effective, must take ever greater account of the human factor. Several examples prove that attack vectors which belong to the area of ‘social engineering’ are menacingly successful. Employees of enterprises, especially SMEs, frequently underestimate their importance when assessing security risks and the defence against them. As a consequence of these findings, a company-wide risk management should respect cultural and psychological peculiarities. Another promising approach are AI-based concepts, both as a technical defence against cyberthreats and in respect of processes specific to the company, as well as culture-specific characteristics of its employees. Both approaches are based on understanding human behaviour in its sociocultural context. Within the scope of this paper, this cultural aspect of cyber security is examined with regard to whether certain cultures may be less predisposed to cyberthreats than others. This is analysed using the example of Germany and also considers the question whether more or less authoritarian company cultures play a role in this context. How can phenomena such as German angst and similar cultural peculiarities be adequately taken into account? The remarks are mainly targeted at an audience which is concerned with organisational and technical countermeasures again cyberthreats. They focus on the importance of incorporating findings from psychology and social sciences when designing and realising such measures.

Author’s Biography

Jochen Werne is the Chief Development and Chief Visionary Officer (CDO/CVO) and executive committee member of PROSEGUR Cash Services Germany Ltd. Prior to that he was director and authorised officer of the Bankhaus August Lenz & Co. AG. Jochen is also member of the Federal Ministry of Education and Research Initiative ‘Learning Systems’ — a platform for artificial intelligence, member of the expert board of Management Circle, as well as a member of one of the most important think tanks worldwide: Chatham House, the Royal Institute of International Affairs. Jochen is a keynote speaker at various banking, innovation and executive conferences as well as an author and co-author of several textbooks and professional articles.

ABOUT Cyber Security: A Peer-Reviewed Journal

Cyber Security is the major peer-reviewed journal publishing in-depth articles and case studies written by and for cyber security professionals.  It showcases the latest thinking and best practices in cyber security, cyber resilience, cyber crime and cyber warfare, drawing on practical experience in national critical infrastructure, government, corporate, finance, military and not-for-profit sectors.

Each quarterly 100-page issue analyses significant current and emerging cyber security threats and the latest strategies, techniques and technologies available to detect, manage and react to them, helping to uncover potential weaknesses in your current systems which could be open to attack. Its detailed articles and case studies – all of which are peer-reviewed by an Editorial Board of leading cyber security experts – provide in-depth, actionable advice and ‘lessons learned’ from fellow professionals, showing how cyber security programmes have been specified, designed, implemented, tested and updated in their organisations, as well as how data breaches and exercises have been managed in practice.

Cyber Security does not publish advertorial or advertising but rather in-depth articles on key topics including:

  • Cyber security risk assessments, platforms and frameworks
  • Building cyber response programmes
  • Protective measures
  • Threat surface analysis and detection
  • Incident response and mitigation
  • Training ‘red’ teams
  • Crisis and reputation management
  • Recovering from a data breach
  • Employee and customer awareness, education and training
  • Workforce analysis and programmes
  • Reporting to senior executives and getting sufficient funding
  • Scenario planning, penetration testing and cyber security exercises
  • Reducing insurance premiums
  • Cyber security in the supply chain
  • Insider threats
  • Cloud security risk
  • Cyber warfare, cyber terrorism and state-sponsored attacks
  • Safe disposal of sensitive data
  • Cyber security investigations and digital/analogue forensics
  • Hackers’ techniques and motivations
  • Security architectures and network assurance
  • Internet fraud techniques
  • Encryption, cryptology and data protection 
  • User behaviour analytics