60% of banknotes issued in France are held abroad

In a recent analysis of net banknote issuance in 2019, the Banque de France reveals that around 60% of banknotes issued in France circulate outside its borders.

Banknote issues mainly serve foreign demand

The Banque de France recently published a working paper analyzing the different reasons for demand for banknotes issued in the country.

" Although the central bank knows exactly how much cash has been issued, there is a lack of information on who holds it, for what purposes and where it circulates," explains the institution.

Focusing on 2019, the document reveals that around 60% of the banknotes issued by the Banque de France are actually held outside France. Between 40% and 50% of these bills circulating abroad are held outside the euro zone.

Cash demand falls into 3 main categories:

  • foreign demand
  • hoarding
  • the transaction

In 2019, only 15% of net issues were used for domestic transactions, totaling 20 billion euros. 25% of banknotes issued by the Banque de France, amounting to 35 billion euros, were used for hoarding.

Foreign demand accounted for the bulk of these issues, with other eurozone countries accounting for 10-20% and non-eurozone countries for 40-50%, for a total of 75-100 billion euros.


A decline in the number of banknotes used for domestic transactions

From the introduction of the euro in 2002 to the end of 2021, net banknote issuance in France has risen from €30 billion to almost €185 billion, explains the Banque de France in its working paper, pointing out that " this is true not only in absolute terms, but also in relation to GDP ".

The Banque de France also notes the decline in the share of banknote issues used for domestic transactions, from 20% in 2015 to 15% in 2019. This decline can be explained, according to the institution, by the decline in cash in favor of other means of payment, as well as by the reduction in the number of ATMs.

This trend was further accelerated by the Covid-19 pandemic, which favored payment by bankcard, and more specifically contactless payment.

A survey carried out by the European Central Bank in 2022 reveals that businesses in the eurozone still accept cash on a massive scale. Over 90% of companies and businesses in the euro zone that still accept cash today have no plans to change their strategy in the future. This figure rises to 99% for French businesses.