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The use of cash in France and in the euro area

Banknotes and coins are the most widely used payment instruments by transaction volume. Their function as a store of value also means they are strongly in demand for hoarding purposes.

The use of cash for transaction purposes

Overall, banknotes and coins represent over 50% of transactions in most OECD countries, albeit with significant differences across countries.

According to ECB data (2011), in the euro area, banknotes and coins are used on average in about 70% of transactions at the "point of sale" and represent 90% of transactions below EUR 20.

In France, banknotes and coins account for just over 50% of transactions in number terms but 15% in value terms, less than in other major countries of the euro area (over 80% in Germany, for example). Thus, only 15% of the French use cash for transactions between EUR 30 and EUR 100, against 69% in Germany and 72% in Italy.

The market share of banknotes and coins in transactions is on the decline. France stands out in particular by a strong use of cashless payment instruments. Thus, the average number of cashless transactions per capita per year in 2014 was 287, against 202 on average in euro area countries and in the European Union.

The payment card represents almost 50% of cashless payments in France, and its share is growing faster than other means of payment (cash, cheques, credit transfers or direct debits).

The use of cash as a store of value

In addition to their use for transaction purposes, banknotes act as a store of value. According to most studies on the subject, only 35% to 40% of banknotes in terms of value are held to carry out transactions. These cash holdings meet a need for security, economic agents choosing to hoard money for precautionary purposes to guard against future hazards, in particular during periods of economic uncertainty or political unrest.

This use of cash for hoarding purposes is notably driven by a dynamic international demand. Indeed, the ECB estimates at 25% the share in value terms of euro banknotes held outside the euro area. A minima, the information provided by international banks confirms that net shipments of euro banknotes outside the euro area account for about EUR 180 billion, i.e. almost 17% of euro banknotes in circulation. It is a lower bound because these flows do not include all the channels through which banknotes leave the euro area, such as outflows attributable to tourists or foreign workers.

Updated on: 01/10/2017 11:55