Bundesbank's Thiele warns against limit on cash payments

FRANKFURT, Feb 9 (Reuters) - An upper limit on cash payments could lead to a loss of faith in the euro as a currency, a board member of Germany’s central bank warned in a newspaper interview.

“A currency is based on trust and it would be disastrous if people’s faith was damaged,” daily Frankfurter Allgemeine Zeitung quoted the Bundesbank’s Carl-Ludwig Thiele as saying in an excerpt of an interview to be published on Wednesday.

The European Commission is weighing stricter rules on the use of cash as part of a wider plan to counter terrorism and its financing after attacks in Paris last November by Islamic State militants that killed 130 people.

Germany’s deputy finance minister Michael Meister said last week that Germany could imagine talking about a ceiling of 5,000 euros ($5,611).

The head of the EU anti-fraud office, a Commission department, has also called for the 500 euro bank note to be scrapped to curb illicit or criminal cash transactions.

“We are still in a fragile economic situation in the euro zone, and it does not seem smart for the government to talk about setting limits on cash payments and for the ECB (European Central Bank) to consider abolishing 500 euro bank notes,” Thiele told Frankfurter Allgemeine.

$1 = 0.8911 euros Reporting by Maria Sheahan; Editing by Catherine Evans