 Cash holdings in Germany and the demand for "German" banknotes: What role for cashless payments?Nikolaus Bartzsch and Franz Seitz No 51, Weidener Diskussionspapiere from University of Applied Sciences Amberg-Weiden (OTH) Abstract: This paper models the demand for banknotes issued in Germany. It highlights that all motives for holding banknotes are present in this case. Inter alia, special attention is paid to the role of card payments. For small and large denomination notes we are able to establish meaningful vector error correction models (VECM). The results suggest that the long-run demand for German small denomination notes is mainly driven by domestic transactions and demand from outside the euro area. The transaction motive in the rest of the euro area and non-cash payments are part of the short-term dynamics. The long-run demand for German large denomination notes is mainly driven by foreign demand both from the rest of the euro area and outside the EMU. The global financial crisis led to a one-time increase in the (real) demand for these notes. Our results are in line with estimates according to which the level and dynamics of banknote demand are largely determined by foreign demand. It was not possible to setup a VECM for medium denominations for which we resort to a singleequation approach. Card payments do not play any role for the medium and large denomination categories. Keywords: banknotes; vector error correction; card payments (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:hawdps:51 Access Statistics for this paper More papers in Weidener Diskussionspapiere from University of Applied Sciences Amberg-Weiden (OTH) |
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