Since the launch of the euro, banknotes in circulation have increased by 133% in volume and 380% in value. The cost of cash which represents about half the costs of retail payments – whereas cash accounts for 60% of all retail transactions according to the G4S Cash Report 2016 Europe – has increased by 30% between 2002 and 2012, significantly slower than the number of notes and the overall value.
Nonetheless, the European Payments Council (EPC) calls for efforts to further reduce the cost of cash. According to the ECB study, The Social and Private Costs of Retail Payment Instruments, the overal cost of cash amounted to $65 billion in 2012.
The EPC recommends two key measures to achieve this goal:
The report suggests the establishment of a virtual cash infrastructure within the eurozone, enabling banks to access the services of any national central bank without practical obstacles such as packaging or cross-border transportation.
In particular, the EPC stresses the importance of Balance Sheet Relief Mechanisms which enable commercial banks to hold wholesale cash off-balance sheet and contributes to compensate the additional costs of banknote recirculation.