Cash Isn’t Dead Yet: Why the ECB Still Backs Banknotes in a Digital Era

While digital payments continue to gain ground across Europe, the ECB isn’t letting go of physical cash. In a recent post, Executive Board Member Piero Cipollone laid out a detailed case for why banknotes and coins still matter – and why they’re not going anywhere anytime soon.

The Core Message: Cash Is Here to Stay

Cash, according to the ECB, remains a fundamental part of Europe’s payment landscape. Cipollone’s message underscores a few key points: cash is still legal tender, demand for it as a store of value is robust, and many Europeans expect to retain the option to use it. Even as contactless and mobile payments gain popularity, cash continues to circulate in large volumes – over €1.6 trillion worth, by ECB estimates.

Instead of being phased out, physical cash is positioned as the stable foundation upon which digital systems are being layered. A digital euro, the ECB says, will add options – not remove them.

Why the ECB Is Talking About This Now

The renewed emphasis on cash comes alongside two new legislative proposals: one to reinforce the legal tender status of euro banknotes and coins, and another to define the framework for a digital euro. This regulatory dual-track illustrates the ECB’s balancing act: preserving what works while preparing for what’s next.

Cipollone points to rising concern over declining ATM access and branch closures, trends accelerated by banking sector consolidation. In response, the ECB and European Commission are developing common indicators to assess access to cash across regions, with tailored thresholds for urban and rural areas.

Infrastructure and Inclusion

Access to cash is uneven across the euro area. In some regions, shrinking ATM networks and fewer bank branches have made it harder for people to withdraw or deposit funds. Surveys cited by Cipollone suggest that dissatisfaction with banks’ cash services is rising, especially among rural residents and small businesses.

Retail cashback services have emerged in places, but the ECB notes these are limited in both reach and function. They can’t substitute for the full suite of banking cash services, especially deposits.

To address this, the proposed regulation mandates better monitoring and oversight at the national level. The ECB sees reliable physical access as not just a convenience but a matter of financial inclusion.

The Crisis Factor

Cash has repeatedly proven its value in moments of instability. From the 2008 financial crisis to COVID-19 to regional power outages, physical currency has been a fallback when digital systems were compromised. Cipollone argues that this role as emergency infrastructure remains vital.

It’s not just about sentiment or tradition – in some cases, it’s about operational resilience. A digital euro could fail if networks go down. Cash does not.

Future-Proofing Cash

Far from signaling the decline of cash, the ECB is actively working to modernize it. A redesign of euro banknotes is underway, with input from both experts and the public. The next generation of bills will include enhanced security features and updated design aesthetics aimed at maintaining trust and usability.

Meanwhile, the ECB continues to coordinate with national central banks to ensure ample cash stocks and smooth distribution, even during demand surges.

Coexistence, Not Replacement

The ECB’s defense of cash is not just about preserving the past. It’s a signal that multiple forms of money – digital and physical – will need to coexist in the years ahead. Cash remains embedded in the infrastructure of European commerce, especially for the most vulnerable populations. In the ECB’s vision, choice is power – and for now, that means keeping both cards and coins in the wallet.