The Eurosystem cash strategy and the role of cash

The Eurosystem cash strategy

Cash is an important part of your freedom to choose how to pay and essential for the financial inclusion of all groups in society. Our cash strategy aims to ensure that cash remains widely available and accepted as both a means of payment and a store of value. 

Euro banknotes and coins are legal tender in the euro area, and cash is the only form of public money to which everyone can have direct access. The ECB and the national central banks – also known as the Eurosystem – have a fundamental responsibility, together with the banking sector, to ensure the smooth supply of cash and facilitate the use of cash in payments by people and businesses.

Banknotes are part of our economy, our identity and our culture – and we at the ECB have an immense responsibility to ensure that people maintain their trust in them.

Christine Lagarde, President of the ECB

We ensure the availability of euro cash

We work to ensure that euro banknotes and coins are available to the public at all times. The national central banks offer free-of-charge cash services throughout their countries and they also work to make the cash cycle as cost efficient as possible. We also take into account the needs of international markets since between 30% and 50% of euro banknotes circulate outside the euro area. And if a digital euro euro were to be issued in future, it would exist alongside cash.

We support access to cash services for everyone

We want people and businesses to have access to their money, whatever their preferences and payment needs. For this to happen, banks need to provide adequate cash services, including cash withdrawals that are free or incur only a reasonable fee. We also support retailers that provide complementary cash services such as “cash back” or facilitate limited cash withdrawals and deposits. We help banks to deal with sudden surges in demand for banknotes and make sure that cash can be used as a fall-back means of payment in case electronic payments are temporarily unavailable.

We make sure that cash is accepted everywhere

Most people in the euro area still prefer to use cash for retail payments. Ensuring that cash is accepted everywhere is therefore a vital part of the payment system and is also in line with its status as legal tender. It allows consumers the freedom to choose how to pay and means that people who do not have access to electronic payments are not disadvantaged. Retailers, traders and other private businesses cannot refuse cash payments, unless the two parties have previously agreed on other means of payment. Generally, public authorities and service providers must also accept cash, unless otherwise stipulated by law.

We develop innovative and secure euro banknotes

Euro banknotes are protected by the latest and most effective technologies to make them highly resistant to counterfeiting and easy to authenticate. We ensure the authenticity and high quality of euro banknotes in circulation and enforce strict standards for how banks and professional cash handlers check and authenticate them. The European Commission’s PERICLES programme is also encouraging the development of security features for potential future upgrades of the current euro coin denominations. Last but not least, we aim for the design of euro banknotes to be one that Europeans can identify with.

We keep banknotes safe and sustainable

We make sure that banknotes are safe to use by researching the potential impact of euro banknote production and circulation on public health and carrying out scientific examination and testing. We also look at the environmental footprint of banknotes to identify opportunities to reduce their environmental impact via new products and processes. This ensures that euro banknotes and their production processes become as sustainable, green and environmentally friendly as possible.

The role of cash

The economy requires a certain amount of available cash to function. Cash is the dominant means of payment within the euro area, as the clear majority of our daily payments are made using banknotes or coins. Cash is also essential for the inclusion of socially vulnerable citizens, such as the elderly or lower-income groups.

But cash offers other important functions and benefits:

  • It ensures your freedom and autonomy. Banknotes and coins are the only form of money that people can keep without involving a third party. You don’t need access to equipment, the internet or electricity to pay with cash, meaning it can be used when the power is down or if you lose your card.
  • It’s legal tender. Creditors, such as shops and restaurants, cannot refuse cash, unless both they and the customer have agreed on another means of payment in advance. For more information see the European Commission recommendation of 22 March 2010 (2010/191/EU).
  • It ensures your privacy. Cash transactions respect our fundamental right to have our privacy, data and identity protected in financial matters.
  • It’s inclusive. Cash provides payment and savings options for people with limited or no access to digital money, making it crucial for the inclusion of socially vulnerable citizens such as the elderly or lower-income groups.
  • It helps you keep track of your expenses. Cash allows you to keep closer control of your spending, for example by preventing you from overspending.
  • It’s fast. Banknotes and coins settle a payment instantly.
  • It’s secure. Cash has proven to be secure in terms of cybercrime, fraud and counterfeiting. And, as it’s central bank money, it doesn’t entail financial risks for either the payer or the payee.
  • It’s a store of value. Cash is more than just a payment instrument. It allows people to hold money for saving purposes without default risk. It is useful for small person-to-person gifts and payments. For example, parents can entrust small amounts of cash to their children for small purchases, or a person can give a friend or acquaintance cash to purchase something on their behalf. Cash also contributes to the financial literacy of children.