I do not believe this is limited to the EU. Anecdotally a grocery store clerk was venting to me here in the U.S. that everyone was paying in cash.
That said, there's a pretty clear bifurcation between a lot of retail banks that are happy to make money off all the small accounts and lazy money in checking accounts and the brokerage money market and other accounts paying around 4% or so these days which are actively pursuing deposits.
Not to mention peoples money would smell like their beds. I prefer using safes for quick access things and deep unmarked holes for longer term storage. One of my methods is to pay extra for services so that I keep a credit on each account such as internet, power, etc... I also keep about 100 gallons of fuel with fuel stabilizer and SeaFoam.
I believe the logic is that if one has enough cash on-hand and their bank gets into trouble, they can still pay for food, fuel and other basic things to get by. It probably won't help for paying large bills like rent and mortgage unless people risk keeping a lot more cash on-hand. One can go into their brick and mortar bank to pay cash for their mortgage. It's good to do this periodically to pay extra towards the principal and shorten the loan duration.
For what it's worth, where I live (in Germany), it's usually just plain impossible to pay rent or mortgages in cash. The landlord or mortgage provider will instead use SEPA Direct Debit to pull the money out of your bank account directly. When I see a US-made movie where the landlord knocks on someone's door to collect rent in cash, it's rather bewildering. In Germany, any sentence that includes the phrase "paid rent in cash" probably starts or ends with "this is how I got scammed".
That might be the result of thinking movies bear any resemblance to reality. Approximately nobody pays rent in cash in the US, either. But movies are about telling stories, not describing how things really are.
At least above a certain income level if they're not paying someone off the books or maybe splitting a bill with friends/family (and even that is often some digital payment or a check) cash is increasingly uncommon. I don't think I've withdrawn money from an ATM in a couple years. And, certainly rent/mortgage, it would be almost unheard of in most situations. No one wants to be handling thousands of dollars in cash in an urban area.
It's not like the "don't declare income" slice of the economy disappeared.
If you're paid in cash but not declaring it, you probably want to pay rent in cash too.
Quick search, but unbanked seems a good proxy for "pay with cash": https://www.fdic.gov/analysis/household-survey/index.html
From the above, somewhere between 4.5% (average) and ~8% (low income African-American and Hispanic) people do not have a bank account.
Add in some more who choose not to declare, and it's a small but significantly non-zero number.
It very well may be. Though the last time I had to survive without a bank account, it didn't mean I paid big bills like rent using cash, it meant I got familiar with the local check cashing place and used money orders a lot. My landlords didn't want to deal with me giving them a bunch of cash every month.
This only really happens in a friendly context with family or if someone is behind on rent.
You do know that not all movies represent reality, right? Iron Man, Bat Man and Spiderman do not exist, even though they're often seen in American movies.
Meanwhile in the real world of Germany, when I see the assistant at my dentist in Germany writing pacient appointments in a giant paper log-book instead of a digital calendar on a PC, it's rather bewildering.
Also bewildering, is the so called digital stuff being done through snail mail, and people paying in cash at restaurants so they can do tax fraud. Try asking them for a real receipt and not a hand written one and look at their faces.
My point is Germany is backwards in enough areas not to afford to take a high horse stance.
Right now things are slowing down, and have been for a while. Not so much because demands are declining, but because interest rates are increasing. Which means a lot of people are looking to put their money into safer options than what they have been for the past decade or so. Traditionally this would have been (or at least involved) banks, but because many banks have been slow to drop their negative interest rates on in-loans, they are also very unattractive options when you're looking to store your savings. At the same time, banks have been a little slow to react to the fact that there are now a lot of stable options for those €100K+ investments because their primary focus has been on loaning and not in-loaning.
I wouldn't worry too much about the banks unless you have stock options in them or work for one. Especially if you don't have more savings than what is covered by your government. But pulling money out to keep as cash would only really make sense if you're paying a lot of money to keep them in the bank, and if that's the case, I'd probably look for a different bank first. Depending on where you live in the world of course.
For investors, institutional loaners and people who have more money than what is covered by your country’s laws or the banks insurance, you will likely have to wait for a lengthy bankruptcy process to see what remains of your money beyond what is covered. Typically in-loans will be quite high on the bankruptcy priority list, but sometimes there won’t be enough money to cover much of it. Often there will also be various lawsuits in the wake of a bank failing, as investors try to get what they can.
Where it can be severely disruptive is if your company has money in the bank exceeding the “regular people” amount. Because that would mean your company would have to wait for the bankruptcy process to obtain access to its funds.