Cash: a hoarded asset that is highly valued abroad
The Banque de France takes into account the high level of demand for cash, which is driven by hoarding and foreign demand. While payments in cash are declining, net demand for banknotes remains structurally positive.
According to European Central Bank (ECB) estimates, between 30% and 50% of euro banknotes (in value terms) are held outside the euro area. The circulation of the euro beyond its borders essentially corresponds to net transfers of banknotes outside the euro area by major international banks operating on the currency market. It does not take into account other channels of net banknote outflows, such as tourism, transfers of funds by migrant workers, or the grey economy.
In its most recent work, the ECB estimates that transactional use of euro banknotes accounts for around 20% of their circulation in value terms, with the remaining 80% split broadly evenly (40-40, plus or minus 10 percentage points) between cash held outside the euro area and cash hoarded within the euro area.