A central bank’s views on the latest developments in the use of cash

ATM & Payments Innovation SummitMadrid, 17 – 19 October, 2018

Henk EsselinkEuropean Central BankHead of SectionIssue and Circulation

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Cash withdrawals as indication of cash use

Overview

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The banknote circulation as an indication of cash use

Concluding remarks

Survey results on the use of cash

Cash withdrawals and processing as an indication of cash use

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1. Overview of the euro banknote circulation

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0%

2%

4%

6%

8%

10%

12%

14%

0

200

400

600

800

1,000

1,200

1,400

20082009

20102011

20122013

20142015

20162017

2018

EUR billion

annual growth rate (%)

4.5%Annual growth rate circulation value end-Sept

21.7 billionBanknotes in circulation

€ 1,195 billionTotal value of € banknotes in circulation

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Circulation development per denomination

value

1. Overview of the banknote circulation

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Growth rates per denomination (percentage)

1. Overview of the euro banknote circulation

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2008 2010 2012 2014 2016 2018

€500 €200 €100 €50 €20 + €10 + €5

1. Overview of the euro banknote circulation

6

Cash/GDP ratio world-wide (percentage)

Sources: Central banks; OECD; RBA; Statistics SwedenThe Future of Cash (2016) Davies, Doyle, Fisher and Nightingalehttps://www.rba.gov.au/publications/bulletin/2016/dec/pdf/rba-bulletin-2016-12-the-future-of-cash.pdf

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ECB-RESTRICTED1. Overview of the euro banknote circulation

But: Definition of store of value è If you put aside cash and only pay with it after 1, 3 or 12 months is that transaction cash or store of value?

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Source: Trends and developments in the use of euro cash over the past ten years, ECB, Economic Bulletin, September 2018

Demand outside the euro area

30%

Domestic transactions

25%

Domestic store of value

45%

8

ECB-RESTRICTED1. Overview of the euro banknote circulation ECB-UNRESTRICTED

Source: Trends and developments in the use of euro cash over the past ten years, ECB, Economic Bulletin, September 2018

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vault cash

Development commercial bank’s vault cash (in EUR mln)

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Cash withdrawals as indication of cash use

Overview

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Environmental impact of cash payments 6

The banknote circulation as an indication of cash use

Concluding remarks

Survey results on the use of cash

Cash withdrawals and processing as an indication of cash use

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2

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Cash withdrawals by source - values of withdrawals (euro area percentages)

Sources: ECB, DNB. (EA-18)

Bank counter8%

A cash dispenser

(ATM)61%

Cash back at a

shop 2%

Cash reserves e.g.

cash jar8%

Family, friends or

colleagues9%

Other source

7%

Doesn’t know/Not

stated5%

2. Cash withdrawals as indication of cash use

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Value of card payments and cash withdrawals at ATMs (euro area, in EUR mln)

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2. Cash withdrawals and processing as indication of cash use ECB-UNRESTRICTED

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

card paymentscash withdrawals

2.6%Average annual growth rate withdrawals last 10 years(cards 5.8%)

6 countrieswithdrawals > card payments(DE, GR, IT, AT, LT, LV)

4 countriesSee a decline in cash withdrawals over > 3 years (BE, GR, NL, FI)

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•Germany (EUR bn) •Italy (EUR bn)

2. Cash withdrawals as indication of cash use

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0

100

200

300

400

500

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

card payments ATM cash withdrawals

0

50

100

150

200

250

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

card payments ATM cash withdrawals

•Spain (EUR bn) •France (EUR bn)

0

50

100

150

200

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

card payments ATM cash withdrawals

0

100

200

300

400

500

600

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

card payments ATM cash withdrawals

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Trends in banknote processing for recirculation (billion notes, euro area)

2. Cash withdrawals and processing as an indication of cash use

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33.6 32.9 32.3 32.3

29.7 32.0 35.6 36.2

0

10

20

30

40

50

60

70

80

2014 2015 2016 2017

NCBs3rd parties

+2.5%+4.5% +0.9%

47%

53%

49%

51%

52%

48%

53%

47%

Share banks/CITS

Share NCBs

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Cash withdrawals as indication of cash use

Overview

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Environmental impact of cash payments 6

The banknote circulation as an indication of cash use

Concluding remarks

Survey results on the use of cash

Cash withdrawals and processing as an indication of cash use

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3. Survey results on the use of cash

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Market share of payment instruments at POS in 2016

Source: ECB, BBK, DNB. (EA-19)

Cash78.8%

Cards19.1%

Other2.1%

Number Value

Cash53.8%

Cards39%

Other7.2%

Based on the 2017 survey in Germany, the share of cash in 2016 would have been 76%

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3. Survey results on the use of cash

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number of transactions value of transactions

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11 countries > 75%5 countries 50-75%2 countries < 50%

1 country > 75%11 countries 50-75%7 countries < 50%

Share of cash transactions at the POS in 2016

3. Survey results on the use of cash

17Source: ECB, BBK, DNB. (EA-19)

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59%48% 48% 46% 44% 43% 42% 40% 39% 37% 33% 32% 32% 32%

24% 21% 20% 19% 18% 17%

30%

31% 37%33%

47%39% 40% 44% 45% 47%

17%

43%52% 53%

63% 65%54% 57%

66% 66%

12%20% 15%

21%10%

17% 18% 15% 16% 16%

50%

25%16% 15% 13% 14%

26% 25%16% 17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CY AT MT IE SI GR ES LT IT LV DE euroarea

PT SK NL LU FI EE BE FR

cashcard or other non-cash payment methodsyou have no clear preference between cash or non-cash payment methodsdon't know

Consumers’ preferred payment instrument (%)

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Use of cash over the years (percentage of cash over all POS transactions)

3. Survey results on the use of cash

Source: ECB, Danmarks Nationalbank, Deutsche Bundesbank, De Nederlandsche Bank, UK Finance (UK Payment Markets Summary 2018), Swiss National Bank and Sveriges Riksbank.

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

NetherlandsGermanyeuro areaSweden

SwitzerlandUKDenmark

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Cash withdrawals as indication of cash use

Overview

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Overview of the euro banknote circulation

Concluding remarks

Results of a survey on the use of cash

Cash withdrawals and processing as an indication of cash use

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• Euro banknote circulation shows a robust growth, even of the transaction denominations (€5, €10 and €20)

• On average ATM withdrawals and banknotes processed are increasing, albeit very moderately

• Use of cash still strong, and on average 1/3 of euro area citizens prefer to pay with cash over other means of payment

• …but large differences between countries; in terms of value of transactions cash may be marginalised in some countries in 2030

• …action is needed to ensure availability and acceptance of cash for those who want to use it

Nevertheless…

“Reports on the imminent death of cash are greatly exaggerated”

4. Concluding remarks ECB-UNRESTRICTED

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Thank you for your attention!