Nikolaus Bartzsch

Cash holdings in Germany and the demand for "German" banknotes: What role for cashless payments?

Generally speaking, all euro-area national central banks issue euro banknotes. Following the introduction of euro cash at the start of 2002, the cumulated net issuance of euro notes by the Deutsche Bundesbank (“German” euro notes) increased from an initial €73 billion to €508 billion at the end of 2014. Figure 4.1 shows that the volume of these German euro banknotes outstanding has grown very much faster than could have been expected on the basis of earlier growth rates of D-Mark currency. For the first two years after the launch of euro cash, this strong growth could be explained by the need to replenish stocks of hoarded banknotes both inside and outside the euro area after the currency changeover. However, this should have ceased to have an effect at the end of 2003 when the volume of German banknotes outstanding returned to the hypothetical level that would have been reached had euro cash not been introduced. Nevertheless, the pace of growth in the volume of banknotes outstanding continued to be much more dynamic than in the D-Mark era in the 1990s. As shown in Bartzsch et al. (2011a), this huge surge is due to foreign demand for euro banknotes. They find that, at the end of 2009, around 70% of the cumulated net issuance was held outside Germany.

A simple way to capture currency abroad

In this article, we analyse the volume of euro banknotes issued by Germany that circulate abroad. Inferences are drawn from a coin model. Our approach suggests that foreign demand has increased since 2002. At the end of 2009 nearly 50%, the equivalent of €170 billion, is held outside the euro area.

What can biology tell us about transaction balances

ABSTRACT The total cash issuance of a central bank consists of domestic transaction and hoarding balances as well as foreign demand. The different shares are not known exactly. The introduction of the new Europa series of banknotes in the euro area offers the opportunity to calculate transaction balances with the help of a biometric method. Our results indicate that transaction balances are very low.