The volume of euro coins held for transaction purposes in Germany
Markus Altmann and
Nikolaus Bartzsch
MPRA Paper from University Library of Munich, Germany
Abstract:
According to estimates using the seasonal method, the volume of euro coins held for transaction purposes in Germany in 2011 stood at €2.3 billion; this corresponds to around 36% of the total volume of German (ie issued by the Deutsche Bundesbank) euro coins in circulation. 76% of the total volume of coins held for transaction purposes was accounted for by €1 and €2 coins. Only in the case of €2 coins has the cash stock held for transaction purposes made a significant contribution to the growth in the volume of coins in circulation in recent years. Therefore, structural models are the most suitable method of determining the demand for this denomination. Given the overall weakness in the growth of the cash held for transaction purposes, coin processing costs have, all other things being equal, risen less sharply than the volume of coins in circulation. Small denomination coins (1 and 2 cent coins) account for comparatively low shares of the coins held for transaction purposes (less than 30%). This is because they are hoarded to a greater extent in order to lighten one’s wallet or purse, or are lost. This could be used as an argument for applying a rounding rule (to nearest five cents). It is presumed that abroad German euro coins are, on balance, only held outside the euro area. There they are being hoarded on a permanent basis. Due to the inadequate data availability, the cash balance held for domestic transactions by sector cannot be fully recorded. Estimates for 2011 put them at between €0.7 billion and €1.0 billion. Households and credit institutions accounted for the largest share.
Keywords: Coins; transaction balance; hoarding; foreign demand; seasonal method; introduction of euro cash (search for similar items in EconPapers)
JEL-codes: E41 E42 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (6)
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Working Paper: Der Transaktionskassenbestand von Euro-Münzen in Deutschland (2014) 
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