The paradox of banknotes: Understanding the demand for cash beyond transactional use

Alejandro Zamora-Pérez

Economic Bulletin Articles, 2021, vol. 2

Abstract: What explains the strong growth of euro banknote demand, given that the transactional use of banknotes seems to have decreased? Key to explaining this phenomenon – referred to as the “paradox of banknotes” – is acknowledgement of the importance of all three components of banknote demand: euro area transactional demand, euro area store-of-value demand and foreign demand. This article explains these components and estimates their relative size. It also addresses COVID-19-related banknote developments during 2020, highlighting the importance of cash during crises. JEL Classification: E41, E51, E58

Keywords: banknotes; cash; Euro; foreign demand for money; payments; store of value (search for similar items in EconPapers)
Date: 2021-03
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.ecb.europa.eu//pub/economic-bulletin/a ... 3~58cc4e1b97.en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbart:2021:0002:3

Access Statistics for this article

More articles in Economic Bulletin Articles from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().