Cash Demand Surges in Crises, ECB Study Shows
Cash demand has surged during times of uncertainty, as seen in crises like the 2008 financial crisis, the Greek crisis of 2014-15, the COVID-19 pandemic, and more recently, the Iberian blackout of 2025. The European Central Bank (ECB) has analysed these trends, highlighting the importance of cash as a safe-haven asset and essential payment instrument.
Each crisis analysed by the ECB triggered immediate and extreme increases in cash demand. This surge in demand is not surprising, given that cash is tangible, resilient, and widely accepted, even in the absence of technological infrastructure. It serves as a complement to digital payment systems, reinforcing them and providing an offline alternative.
Several European and national authorities, including the German Bundesbank, have recommended keeping cash reserves for sudden and unexpected contingencies. This advice was particularly renewed during the COVID-19 pandemic and subsequent years to ensure liquidity and accessibility of physical money. The ECB's study underscores the importance of protecting cash as a public good for social cohesion and citizens' autonomy in Europe.
The ECB's study shows that cash demand surges during crises, highlighting its role as a safe-haven asset and essential payment instrument. With the value of banknotes in circulation growing significantly over the past two decades, cash's role as a store of value is further emphasised. European and national authorities recommend holding cash reserves to ensure liquidity and accessibility during unforeseen crisis situations.
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