The Cash Cycle

Every day we pay for our shopping using banknotes and coins. But where does this cash actually come from?
And who makes sure that there’s always enough of it where it’s needed, when it’s needed?

Responsibility for the cash cycle lies with the national central banks of the euro area countries. In Germany, this is the Bundesbank.

The central banks decide together how many banknotes are to be printed. Then there are the coins – they are minted by order of the national governments and brought into circulation by the national central banks.

Commercial banks need cash for paying out to consumers and businesses. The commercial banks obtain their required cash from their nearest Bundesbank branch. They withdraw the cash from their Bundesbank bank account.

Cash-in-transit companies specialised in transporting valuable goods transport cash from Bundesbank branches to commercial banks.

Consumers and businesses withdraw the cash from their bank accounts. They use the money to buy goods from retailers for instance.

Surplus cash taken by retailers is usually transported directly back to the Bundesbank branches by the cash-in-transit companies or more rarely paid in at a commercial bank.

After checks for authenticity and quality, the commercial banks can pay the cash back out again to consumers and businesses. The cash processing machines used for these checks have to be approved by the Bundesbank.

Any surplus cash not needed by commercial banks for paying out is also taken back to the Bundesbank branches by cash-in-transit companies.

At the Bundesbank branches, the banknotes and coins paid in are checked for authenticity and quality. Any cash that has become worn is destroyed and replaced with fresh banknotes and coins.

The money that passes the checks is stored in the Bundesbank's vaults until commercial banks need cash to pay out to consumers and businesses again.

Through its branches, the Bundesbank ensures that sufficient banknotes and coins are available at all times to meet the demand for cash. Thus, the cash cycle can begin all over again.