Central bank: Emergency situation did not dampen enthusiasm for cash

Bank of Estonia coat of arms.
Bank of Estonia coat of arms. Source: Siim Lõvi /ERR

The Bank of Estonia issued more than €316 million in banknotes into circulation in the second quarter of 2020 (Q2 2020), a rise of over 25 percent compared with the previous quarter, together with €1.7 million-worth of coins, as the emergency situation declared by the government and which ran from March to May did not seem to curb the demand for cash.

Over the same period, €178 million in banknotes were returned, mostly due to damage.

The net issuing of banknotes stood at 27 percent more than Q1 2020, though 13 percent less on year.

Over half of the banknotes issued were the €50 denomination.

Emergency situation did not dampen enthusiasm for cash

While coronavirus emergency situation recommendations called for the use of contactless card payments where possible, demand for cash remained stable throughout, the central bank says.

A rise in demand for coins since the end of Q2 2020 can be explained by the arrival of open-air events in summer, where merchants require more small change in return for cash payments, the bank says.

Little change was reported in the cash machine network, with €832 million taken out over the quarter, over 6.1 million withdrawals.

Cash was deposited on 1.1 million occasions in Q2 2020, totaling €393 million.

Cash withdrawals from stores growing in popularity

Withdrawals of cash from shop tills increased by 35 percent on the first quarter, the bank said, reflecting easing coronavirus restrictions.

Shop till withdrawals have also proved particularly popular in rural areas, and 60,000 such withdrawals were valued at €2.4 million.

Coop Pank rolled out a cash deposit system at its stores last year.

A late 2019 survey by the bank found the accessibility of cash has improved over the preceding two years, with cash machines being most popular, for withdrawals particularly between €20 and €100, and withdrawals from shop tills and bank offices used by around 4 percent of residents.

Counterfeiting not major issue

Damaged banknotes are exchanged only if over 50 percent of the original note remains intact.

The bank says counterfeiting of notes and coins is not a big problem.

Seventy counterfeit bills were registered by the forensic science institute in Q2 2020, mainly €10 and €20 notes. Just 12 counterfeit coins were found over the same period.

Kroons can still be exchanged for euros

The central bank issued 6.3 million coins, totaling €1.7 million, and took back 59,000 coins, to a value of €49,000.

Just over half the coins minted were the smallest one- and two-cent denominations, the bank says.

Kroons, the previous currency which was replaced by the euro in January 2011, can still be returned to banks. €38,000-worth of the old currency, over 123 exchanges, were returned.

The bank estimates the total value of old kroon bills and coins still at large to be €44.5 million.

Illustrative diagrams are available on the Bank of Estonia site here.

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Editor: Andrew Whyte

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