AFP, published on Thursday, March 31, 2022 at 3:35 p.m.
The return of banknotes under the mattress: the war in Ukraine has raised the need to keep cash in several European countries, in the face of a long-term trend of decreasing use of cash.
In the countries of northern and eastern Europe, relatively close to Ukraine, the European association for the transport and transmission of securities (Esta) noted at the beginning of the war greater withdrawals of banknotes.
Dispenser fill increased by 25-30% in Slovakia and 15-20% in the Czech Republic during the first two weeks of the war, it reports in a March 8 note.
More surprisingly, this increase is also visible in Finland (+20%) and Sweden (+30%), although these countries are among the European countries that use the least cash.
“In this time of war, we hear a lot about cyber attacks that could stop communications and thus prevent transfers. Cash withdrawals are a form of prevention against these things that could happen if the conflict escalates, ”Michel Tresch, president of the Loomis France transport company, explains to AFP.
“It may seem anachronistic, but today there are many people who, for fear of the future, prefer to have banknotes instead of putting everything in an A booklet,” adds Christophe Baud Berthier, director of fiduciary activities at the Banque de France.
This so-called hoarding phenomenon is accentuated with each new crisis, such as during the financial crisis of 2008 or during the pandemic of 2020. The demand for cash also increases during extreme weather events, such as floods.
In countries where withdrawals have increased since the invasion of Ukraine, withdrawn banknotes are well kept for reserves: It notes that there is no “significant” increase in the number of liquid transactions.
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The European Central Bank (ECB) thus makes a paradoxical observation: in recent years, the demand for banknotes has never been higher… while the use of currency is falling.
According to her, the use of cash fell 6 points between 2016 and 2019 and then represented around 48% of transactions by value, while payments by applications, with a bank card and without contact gained ground.
In France, the Monnaie de Paris, which makes the coins, has also seen government orders fall by 50% in ten years.
With Covid-19, the fear that coins and banknotes are vectors of the virus has further accelerated this phenomenon and “the offer of contactless payment has multiplied in shops, even for very small amounts”, comments M Baud Berthier.
According to a survey carried out in July 2020 by the ECB, 40% of Europeans have paid less in cash since the start of the pandemic.
Despite this fall in the use of cash, the ECB explains that the demand for banknotes is increasing due to the banknote reserves that Europeans manufacture. Many banknotes are also held by people and institutions outside of Europe, as the euro is considered a stable currency and therefore a store of value in case something goes wrong.
At the moment, the frenzy of withdrawals does not seem to have reached France in any case. “French banks have not seen a significant increase in withdrawals or any particular behavior regarding cash withdrawals,” the French Banking Federation told AFP.
Even if demand were to increase, Mr. Baud Berthier assures that the Banque de France’s stock of banknotes would allow it to “cope with a peak without any difficulty”.