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Foreign demand for euro banknotes issued in Germany: Estimation using indirect approaches

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  • Bartzsch, Nikolaus
  • Rösl, Gerhard
  • Seitz, Franz

Abstract

In this paper, we endeavour to determine the volume of euro banknotes issued by Germany that is in circulation outside Germany. In so doing, we draw a distinction between banknotes outstanding in non-euro-area countries and those that are in circulation in other euro-area countries. The analysis is based on approaches that estimate the volume of banknotes in circulation outside Germany indirectly. The observation period runs from 2002 to 2009. We discover that, at the end of 2009, a total of roughly two-thirds of Germany's cumulated net issuance of euro banknotes was in circulation outside Germany. The lion's share of roughly €160 billion was in non-euro-area countries, with the remaining €80 billion in other euro-area countries. Thus, the volume of German euro banknotes in circulation in Germany accounted for only roughly one-third of all banknotes issued by the Deutsche Bundesbank (€350 billion). This confirms the results of direct approaches.

Suggested Citation

  • Bartzsch, Nikolaus & Rösl, Gerhard & Seitz, Franz, 2011. "Foreign demand for euro banknotes issued in Germany: Estimation using indirect approaches," Discussion Paper Series 1: Economic Studies 2011,21e, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:201121e
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    Cited by:

    1. Franz Seitz & Lucas Devigne & Raymond de Pastor, 2022. "Different Motives for Holding Cash in France: an Analysis of the Net Cash Issues of the Banque de France," Working papers 888, Banque de France.
    2. António Rua, 2019. "Modelling the Demand for Euro Banknotes," Working Papers w201905, Banco de Portugal, Economics and Research Department.
    3. Rua, António, 2018. "Modelling currency demand in a small open economy within a monetary union," Economic Modelling, Elsevier, vol. 74(C), pages 88-96.
    4. Luca Baldo & Elisa Bonifacio & Marco Brandi & Michelina Lo Russo & Gianluca Maddaloni & Andrea Nobili & Giorgia Rocco & Gabriele Sene & Massimo Valentini, 2021. "Inside the black box: tools for understanding cash circulation," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 7, Bank of Italy, Directorate General for Markets and Payment System.
    5. Bartzsch, Nikolaus & Rösl, Gerhard & Seitz, Franz, 2013. "Currency movements within and outside a currency union: The case of Germany and the euro area," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 393-401.
    6. Kenneth Rogoff, 2015. "Costs and Benefits to Phasing out Paper Currency," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 445-456.
    7. Martin Handig & Clemens Jobst & Doris Schneeberger, 2012. "The Cross-Border Movement of Euro Banknotes and Austria’s TARGET 2 Liabilities," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 32-52.
    8. Michael Pickhardt & Jordi Sardà, "undated". "Cash, Hoarding and the Underground Economy," Working Papers 201282, Institute of Spatial and Housing Economics, Munster Universitary.
    9. Seitz, Franz & Krueger, Malte, 2017. "The Blessing of Cash," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162911, Deutsche Bundesbank.
    10. Altmann, Markus & Bartzsch, Nikolaus, 2014. "The volume of euro coins held for transaction purposes in Germany," MPRA Paper 59542, University Library of Munich, Germany.
    11. Nikolaus Bartzsch & Gerhard Rösl & Franz Seitz, 2012. "A simple way to capture currency abroad," Applied Economics Letters, Taylor & Francis Journals, vol. 19(15), pages 1511-1514, October.
    12. Richard Finlay & Andrew Staib & Max Wakefield, 2018. "Where's the Money‽ An Investigation into the Whereabouts and Uses of Australian Banknotes," RBA Research Discussion Papers rdp2018-12, Reserve Bank of Australia.
    13. André Cardoso Dias, 2019. "Estimating a country’s currency circulation within a monetary union," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Are post-crisis statistical initiatives completed?, volume 49, Bank for International Settlements.
    14. Uhl, Matthias, 2020. "Coin migration between Germany and other euro area countries," Discussion Papers 49/2020, Deutsche Bundesbank.
    15. Deinhammer, Harald & Ladi, Anna, 2017. "Modelling euro banknote quality in circulation," Occasional Paper Series 204, European Central Bank.
    16. Bartzsch, Nikolaus, 2017. "Transaction balances of small denomination banknotes: findings from the introduction of ES2," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162905, Deutsche Bundesbank.
    17. Hans-Eggert Reimers & Friedrich Schneider & Franz Seitz, 2020. "Payment Innovations, the Shadow Economy and Cash Demand of Households in Euro Area Countries," CESifo Working Paper Series 8574, CESifo.
    18. Rösl, Gerhard & Seitz, Franz, 2022. "On the stabilizing role of cash for societies," IMFS Working Paper Series 167, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    19. Doris Ritzberger-Grünwald & Thomas Scheiber, 2012. "Euro Cash in Central, Eastern and Southeastern Europe," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 41-55.
    20. Katrin Assenmacher & Franz Seitz & Jörn Tenhofen, 2019. "The demand for Swiss banknotes: some new evidence," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-22, December.
    21. Bartzsch, Nikolaus & Rösl, Gerhard & Seitz, Franz, 2013. "Estimating the foreign circulation of banknotes," Economics Letters, Elsevier, vol. 119(2), pages 165-167.
    22. Bartzsch, Nikolaus & Seitz, Franz & Setzer, Ralph, 2015. "The demand for euro banknotes in Germany: Structural modelling and forecasting," MPRA Paper 64949, University Library of Munich, Germany.
    23. Geoffrey R. Dunbar & Casey Jones, 2018. "The (Un)Demand for Money in Canada," Staff Working Papers 18-20, Bank of Canada.
    24. Assenmacher, Katrin & Seitz, Franz & Tenhofen, Jörn, 2017. "The use of large denomination banknotes in Switzerland," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162917, Deutsche Bundesbank.
    25. Lalouette, Laure & Zamora-Pérez, Alejandro & Rusu, Codruta & Bartzsch, Nikolaus & Politronacci, Emmanuelle & Delmas, Martial & Rua, António & Brandi, Marco & Naksi, Martti, 2021. "Foreign demand for euro banknotes," Occasional Paper Series 253, European Central Bank.

    More about this item

    Keywords

    Banknotes; euro; foreign demand; hoarding; transaction balances; domestic migration; Banknoten; Euro; Auslandsumlauf; Hortung; Transaktionskasse; Binnenmigration;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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