Money is alive and thriving within the eurozone regardless of the rise of debit playing cards and contactless cost, and the pandemic has even accelerated this pattern, based on the European Central Financial institution.

Whereas banknotes and cash symbolize a declining share of day by day transactions within the forex bloc, the worth of money in circulation has almost doubled over the previous decade, the ECB mentioned in its financial bulletin.

As soon as dubbed the ‘Banknote Paradox’ by Financial institution of England Governor Andrew Bailey, the phenomenon is especially as a result of two causes: the demand for cash outdoors the bloc and Europeans hoarding cash to retailer their cash. wealth, the ECB researchers wrote.

Greater than 1.4 trillion euros ($ 1.7 trillion) in banknotes had been in circulation on the finish of 2020, up 11% from the earlier 12 months. But proof means that solely a few fifth of this quantity is used for transactions within the forex space.

Research have proven that 30-50% in worth is held outdoors the bloc, as in growing economies with an underdeveloped funds infrastructure and an absence of credible financial savings choices.

The remainder, maybe as much as 50% in worth, is bodily saved by households, companies and banks. A survey confirmed {that a} third of households within the euro space stored money reserves at residence in 2019 – principally small quantities however in some instances exceeding 10,000 euros.

Money development has intensified throughout the coronavirus disaster, at a charge matched solely by the aftermath of the collapse of Lehman Brothers Holdings Inc. in 2008.

“As with different crises, the rise in demand for liquidity has been motivated by precautionary causes, though this demand comes primarily from throughout the euro zone,” the report mentioned. used after the pandemic is over. “

This story was posted from an company feed with no textual content enhancing. Solely the title has been modified.

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