Anxiety over war, wildfires and cyber-attacks leads to growth in cash stocks in EU

Despite the pervasive use of smartphone payments, the amount of physical cash circulating in the European Union is on the rise. Data reveals a notable increase in banknotes in circulation, growing from €1 billion in 2016 to an estimated €1.6 billion by 2026.

Philip Lane, the chief economist of the European Central Bank (ECB), highlighted this trend at the MacGill summer school conference in Ireland. He noted that while contactless payments dominate in many urban areas, the overall demand for physical currency persists and is growing.

This surge in cash holdings is partly attributed to a heightened sense of anxiety among EU citizens. Concerns about potential conflicts, the increasing frequency of wildfires, and the ever-present threat of cyber-attacks are leading individuals to maintain emergency stashes of cash. This behavior underscores a desire for a tangible backup in uncertain times, even as digital finance becomes more integrated into daily life.

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While cash plays second fiddle to contactless payments in many cities across Europe, the amount in circulation is actually going up