In its report “Keep calm and carry cash,” the ECB makes a strong case for why cash is king and money still matters, even in an age of contactless everything.
It turns out that tucking a few banknotes away in the biscuit tin isn’t just an old-fashioned habit, it’s official good sense, according to the European Central Bank (ECB).
Despite the surge in digital payments, demand for physical euros continues to grow. Fewer people might be using notes and coins at the till. But, the overall value of cash in circulation has actually risen sharply over the last two decades. The ECB says this shows that cash still plays a “crucial” role in the economy.
Why cash still matters in times of crisis
The report looks at how people across Europe have behaved during moments of upheaval. From the Greek debt crisis in 2008 and the pandemic, to the Russian invasion of Ukraine, and even the blackout that hit Spain and Portugal. In every case, demand for cash spiked as people instinctively stocked up.
Over the past decade, the value of euro banknotes has hovered at more than 10% of the eurozone’s GDP. It peaked during COVID-19 and eased slightly once interest rates began to climb again in 2022. The ECB says that when things get uncertain, cash offers both psychological comfort and practical reliability. You know exactly what cash is worth, you can use it instantly, and no one’s tracking how you spend it.
A safety net for the system
The ECB points out that no financial system is perfect. In moments of real stress, cash becomes what it calls a form of “social insurance”, a ready-made safety net for communities across the eurozone. It can even act as a counterbalance to the growing dominance of digital payment networks. In short, when the Wi-Fi goes down or systems crash, a tenner still works.
That is why several European countries quietly recommend keeping a modest stash of cash at home. It’s not about hoarding wads under the mattress, but being prepared for a few days without card payments.
In the Netherlands and Finland, for example, civil protection agencies suggest having between €70 and €100 per person, enough to cover essential expenses for around 72 hours.
When did cash become king again?
The ECB calls the sudden rise in cash demand during 2020 the “banknote paradox.” Even as people avoided using notes for hygiene reasons, circulation shot up as households held onto extra reserves just in case.
Then came the major power outage left Spain and parts of Portugal temporarily offline. The incident, the ECB says, perfectly demonstrated why physical money still matters, “when the digital world goes dark, cash keeps the lights on for everyone else”.
