Europe: gradually used the money, but appreciated during the crisis – Finance

The return of banknotes under the mattress: the war in Ukraine awoke to the need to hold money in some European countries, against a long -term trend of decline in the use of money.

In the countries of northern and eastern Europe, relatively close to Ukraine, the European association for transport and delivery of valuables (ESTA) so noticed at the beginning of the war larger withdrawals of banknotes.

The filling of vending machines rose 25-30% in Slovakia and 15-20% in the Czech Republic in the first two weeks of the war, he reported in a memo on March 8.

More surprisingly, this increase is also seen in Finland (+20%) and Sweden (+30%), although these countries are among the European countries that use the smallest currency.

“In this time of war, we hear a lot about cyberattacks that can stop communications and therefore prevent transfers. Withdrawing money is a way of avoiding these things that can happen if the fighting has intensified. “, explained AFP Michel Tresch, president of the transport company Loomis France.

Hoarding increases with each new crisis

“It may seem anachronistic, but there are many people today who, out of fear of the future, are choosing to have banknotes instead of putting everything in one savings account,” Christophe Baud Berthier added. , director of fiduciary activities at the Banque de France.

This so -called hoarding phenomenon is emphasized with each new crisis, such as during the financial crisis of 2008 or during the pandemic in 2020. The demand for money also increases during extreme climatic events, such as of floods.

In countries where withdrawals have increased since the invasion of Ukraine, banknotes withdrawn are kept to make reserves: Esta stresses that there is no “significant” increase in the number of liquid transactions.

Less use, but more demand

The European Central Bank (ECB) thus makes a paradoxical observation: in recent years, the demand for banknotes has never been very high … while the use of money is falling.

According to him, cash usage dropped 6 points between 2016 and 2019 and then represented approximately 48% of transactions by value, while payments via apps, credit cards and contactless has gained ground.

In France, the Monnaie de Paris, which makes coins, has seen government orders drop by 50% in ten years.

In the Covid-19 pandemic, fears that coins and banknotes were vectors of the virus further accelerated this phenomenon and “the offer of no contact payment increased in stores, including for very little value ”, commented Mr. Baud Berthier.

According to a survey conducted in July 2020 by the ECB, 40% of Europeans have paid less in cash since the epidemic began.

Despite this decline in cash use, the ECB explained that the demand for banknotes was rising due to reserves 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.

So far, the flurry of withdrawals does not seem to have reached France in any case. “French banks have not seen a significant increase in withdrawals,” the French Banking Federation assured AFP.

Even as demand rises, Mr Baud Berthier assures that the banknote stocks of the Banque de France will allow “without any difficulty to cope with a peak”.

In the countries of northern and eastern Europe, relatively close to Ukraine, the European association for transport and delivery of valuables (ESTA) so noticed at the beginning of the war larger withdrawals of banknotes. The filling of vending machines increased by 25-30% in Slovakia and 15-20% in the Czech Republic in the first two weeks of the war, he reported in a note dated March 8. Even more surprising: this increase can be seen also in Finland ( +20%) and Sweden ( +30%), although these countries are among the European countries that use the smallest currency. “In this time of war, we hear a lot about cyberattacks that can stop communications and therefore prevent transfers. Withdrawing money is a way of avoiding these things that can happen if the fighting has intensified. “, explained AFP Michel Tresch, president of the transport company Loomis France. “It may seem anachronistic, but there are many people today who, out of fear of the future, are choosing to“ have banknotes rather than put everything in one savings account ”, added Christophe Baud Berthier, director of activities of fiduciary to the Banque de France.This so -called hoarding phenomenon is emphasized in each new crisis, such as during the crisis financial year in 2008 or during the pandemic in 2020. Demand for money also increases during extreme weather events, such as floods.In countries where withdrawals have increased since the invasion of Ukraine, banknotes have been withdrawn are kept to make reserves: Esta really emphasizes that no “significant” increase in the number of cash transactions.That is why the European Central Bank (ECB) makes a paradoxical observation: in recent years, the demand for banknotes has never rise. .as the use of money is declining. According to him, cash usage dropped 6 points between 2016 and 2019 and then represented approximately 48% of transactions by value, while payments through applications, bank cards and contactless is increased. In France, Monnaie de Paris, which makes the coin, has seen government orders fall by 50% in ten years. In the Covid-19 pandemic, fears that coins and banknotes were vectors of the virus further accelerated this phenomenon and “the offer of no contact payment increased in stores, including for very little value ”, commented Mr. Baud Berthier. since the epidemic began. Despite the decline in cash use, the ECB explained that the demand for banknotes was rising due to reserves made by Europeans. of individuals and institutions outside Europe, because the euro is considered a stable currency and therefore a store of value in case something goes wrong. So far, the flurry of withdrawals does not seem to have reached France in any case. “French banks have not seen a significant increase in withdrawals,” the French Banking Federation assured AFP. Even as demand increased, Mr Baud Berthier assured that the banknote stocks of the Banque de France would allow “without any difficulty to cope with the peak”.

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