The European Central Bank published an Economic Bulletin article analysing how euro cash demand behaves in crises, finding that banknote circulation has continued to grow in value despite payment digitisation and that major shocks trigger sharp, event-linked surges in public demand. The research frames cash as both a safe-haven store of value and an offline contingency payment instrument when confidence or digital infrastructure is disrupted. Across four episodes, the analysis links spikes in issuance and withdrawals to specific events using daily data and a Bayesian structural time-series “causal impact” approach. During the COVID-19 pandemic, cumulative net issuance exceeded EUR 140 billion by end-2020, with average daily net issuance in the first 90 days after 24 January 2020 estimated at EUR 616 million versus a EUR 320 million counterfactual, implying a cumulative surge of around EUR 19.5 billion. Following Russia’s full-scale invasion of Ukraine, neighbouring euro area countries saw an estimated 36% causal increase in average daily net issuance in the first month, including a peak of EUR 80 million in one day and a cumulative impact exceeding EUR 211 million. The April 2025 Iberian blackout is used to illustrate cash’s role when digital payments fail, with card spending in affected areas estimated to drop 41-42% and a causal net positive effect on subsequent ATM withdrawal demand after services were restored. In Greece’s sovereign debt crisis, monthly net issuance peaked at nearly EUR 5 billion in June 2015 and the cumulative causal effect of elevated daily net issuance is estimated at EUR 11.2 billion six months after the crisis escalation. The article concludes that these “heavy-tailed” crisis spikes have operational and public-policy implications, including the need for robust cash supply arrangements, adequate stocks and resilient business-continuity planning, alongside growing public guidance in some countries to hold a multi-day cash buffer for essential purchases.
European Central Bank 2025-09-24
European Central Bank research documents crisis-driven surges in euro banknote demand and reinforces cash’s contingency role
The European Central Bank's Economic Bulletin article examines euro cash demand during crises, revealing continued growth in banknote circulation despite digital payment trends. The analysis highlights sharp surges in cash demand linked to major events, such as the COVID-19 pandemic and geopolitical tensions, underscoring cash's role as a safe-haven and contingency payment method. The findings suggest operational and policy implications, including the need for robust cash supply systems and public guidance on maintaining cash reserves for emergencies.