Search Options
Home Media Explainers Research & Publications Statistics Monetary Policy The €uro Payments & Markets Careers
Sort by

Issuance and circulation

The ECB and the central banks of the euro area countries are legally entitled to issue euro banknotes. In practice, only the national central banks (NCBs) physically issue and withdraw euro banknotes (as well as coins). The ECB does not have a cash office and does not handle cash in any way. As for euro coins, the legal issuers are the euro area countries. The European Commission coordinates all coin matters at euro area level. For further information, see the European Commission website.

The ECB oversees the activities of the NCBs and initiates further harmonisation of cash services within the euro area, while the NCBs ensure the proper functioning of their national cash distribution systems. They put banknotes and coins into circulation via the banking system and, to a lesser extent, via the retail trade. The ECB cannot perform these operations as it neither has the functions nor the facilities, i.e. distribution units, banknote processing units, vaults, etc.

The number of banknotes in circulation has risen steadily since the euro was introduced. Low and medium-value notes are mostly used for day-to-day payments. Higher denominations are mainly used as a store of value and for expensive purchases.

Circulation within the euro area

Euro banknotes (and coins) circulate widely in the euro area mainly because of tourism, business travel and cross-border shopping. To a much more limited extent, national banknotes, before the introduction of the euro, also “moved” across borders and then had to be “repatriated”, mainly through the commercial banking system, to the central bank that issued them. Such returns are not necessary with the euro. However, since large quantities of euro banknotes do not remain in the country where they were issued but are taken to other euro countries, and spent there, the central banks have to redistribute them in order to avoid a banknote shortage in one country and a surplus in another. These bulk transfers are coordinated centrally and financed by the ECB.

For information on the volumes of banknote denominations (and coins) circulating in the euro area, please see the statistics section.

Circulation outside the euro area

Euro banknotes are not only used by euro area residents. The euro is an international currency, so some euro banknotes end up outside the area and remain there. It is estimated that, in terms of value, between 20% and 25% of the euro banknotes in circulation are held outside the euro area, mainly in the neighbouring countries. The demand for euro banknotes rose steeply particularly in non-EU countries in eastern Europe when the financial crisis erupted in 2008 and national currencies depreciated against the euro. These euro banknotes remain in circulation, suggesting that they are being kept by non-euro area residents.

The cash cycle

Banknotes follow a specific path through the economy. Commercial banks order them from central banks and then issue them via cash dispensers. People spend them in shops, markets and other places and the banknotes are in turn deposited by retailers and others at their banks. The banks and other cash handlers then either send them back to their respective central bank, or recirculate the banknotes after checking that they are genuine and are “fit” to circulate. Our movie tells the full story:

Life cycle of euro banknotes

The organisation of the cash supply chain varies from country to country and depends on factors such as:

  • the structure of the central bank, including its branch network,
  • the commercial banks and their branch networks,
  • the legal regime,
  • the payment habits of the public,
  • the infrastructure of cash-in-transit companies operating on the market, and
  • the geography of each country, its history and traditions.

Despite these differences, the Eurosystem continues to aim for a greater convergence of the cash services offered by euro area central banks. Stakeholders, such as commercial banks, cash-in-transit companies and other cash handlers, at both national and European level are consulted. Increased harmonisation and integration will allow stakeholders to obtain greater benefits from the single currency.

For further information, see the ECB’s Annual Report.

Good or no good?

Banknotes have to be genuine and of high quality if people are to have confidence in them. So the euro area NCBs use fully automated banknote processing machines to ensure that the notes are authentic and are good enough to be re-issued.

All pages in this section