In a new blog post, the Bank of France assessed how recent shocks have affected banknote circulation, finding that cash demand remains strong despite payment digitalization but that notes are changing hands less frequently. The longer circulation period reflects declining transactional use and greater hoarding in France and abroad. The COVID-19 crisis sharply extended circulation times for notes up to EUR 50, although these subsequently moved back toward their pre-crisis trend. The analysis identifies a gradual shift from EUR 20 to EUR 50 notes, driven by higher prices, larger withdrawals and increased availability of EUR 50 notes at automated teller machines. The circulation period for EUR 100 notes peaked in 2021 before falling sharply, possibly because of large returns from abroad, market saturation and substitution toward EUR 200 notes. Declining net banknote exports since early 2022 support this explanation. To address supply and quality problems affecting heavily used EUR 5 notes, the Bank of France is considering centralizing their recycling, encouraging merchants to return them more frequently and increasing their availability at automated teller machines. A 2025 trial of centralized recycling produced positive results, while an experiment to accelerate merchant returns is scheduled for 2026.
2026-09-03Bank of France
Bank of France finds declining banknote velocity and considers three measures to improve EUR 5 note quality and supply
The Bank of France found that banknote velocity is declining as transactional use gives way to hoarding, even though overall cash demand remains strong. EUR 50 notes are increasingly used for transactions, while EUR 100 circulation has been affected by returns from abroad. The central bank is considering three measures to improve the supply and quality of EUR 5 notes.