AFP, published on Thursday, March 31, 2022 at 3:35 p.m.
The return of banknotes under the mattress: the war in Ukraine has awakened the need to hold cash in several European countries, against a long-term trend of declining use of cash.
In the countries of northern and eastern Europe, relatively close to Ukraine, the European association for the transport and conveyance of valuables (Esta) thus noticed at the start of the war larger withdrawals of banknotes .
Filling of vending machines increased by 25 to 30% in Slovakia and by 15 to 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 cyberattacks that could stop communications and therefore prevent transfers. Cash withdrawals are a form of prevention against these things that could happen if the conflict escalates. “, explains to AFP Michel Tresch, president of the transport company Loomis France.
“It may seem anachronistic, but there are many people today who, for fear of the future, choose to have tickets rather than put everything in a booklet A”, adds Christophe Baud Berthier, director fiduciary activities of 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 in 2020. The demand for cash also increases during extreme climatic events, such as floods.
In countries where withdrawals have increased since the invasion of Ukraine, the banknotes withdrawn are well kept to make reserves: Esta points out that there is no “significant” increase in the number of transactions in liquid.
– Stable currency –
The European Central Bank (ECB) thus makes a paradoxical observation: in recent years, the demand for banknotes has never been so high… while the use of the currency is falling.
According to her, the use of cash fell by 6 points between 2016 and 2019 and then represented around 48% of transactions by value, while payments by applications, by bank card and by contactless gained ground.
In France, the Monnaie de Paris, which manufactures the coins, has also seen government orders fall by 50% in ten years.
With the 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, including for very small amounts”, comments M Baud Berthier.
According to a survey conducted in July 2020 by the ECB, 40% of Europeans have paid less in cash since the start of the pandemic.
Despite this decline in the use of cash, the ECB explains that the demand for banknotes is increasing because of the reserves of banknotes which are made by Europeans. Many banknotes are also held by individuals and institutions outside Europe, as the euro is considered a stable currency and therefore a store of value in case something goes wrong.
For the time being, 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 banknote stocks of the Banque de France would allow “without any difficulty to cope with a peak”.