DNB Becomes Net Issuer of Banknotes

A recent article by the Dutch National Bank (DNB) explained that, as a consequence of the pandemic, its intake of banknotes has fallen to the extent that it is now issuing more euro banknotes than it is getting back in, a first since it started issuing them. The number of notes issued fell by 10% in 2020 but the number of notes received fell by more, by 25%.

The DNB believes there are three reasons for this. Firstly, tourism. In normal times the Netherlands hosts a large number of tourists, who use a great deal of cash. As a result, the DNB receives significant numbers of banknotes that had originally been issued by other euro countries. In the pandemic tourism has fallen by 65%.

Secondly, less cash was withdrawn from ATMs and people used less of what they withdrew. The number of ATM withdrawals fell 37% compared with 2019 and the total amount withdrawn was 27% lower. The average ATM withdrawal value was €23 higher.

The total value of cash deposited by retailers was 34% lower in 2020. It is estimated that Dutch consumers used cash for about 20% of in-store purchases, compared with 32% in 2019.

Finally, the DNB believes cash has been put to one side and hoarded, although some of this cash may have been hoarded by retailers and businesses, not just by the public. Over the entire euro area cash in circulation rose 10% in 2020 to 26.5 billion banknotes. Research shows that the Dutch public trust, and continued to trust, the financial sector through 2020, so the DNB’s conclusion is it may be that people were unwilling or unable to pay in cash.

When considering what will happen to cash volumes post-pandemic, the DNB commented that it ‘seems realistic to assume that these volumes will remain lower than before the pandemic, as the use of cash for point-of-sale payments will not fully recover.’