European households are being advised to keep a substantial amount of cash at home as a safeguard against potential disruptions to digital payment systems and broader economic instability. The recommendation, originating from the European Central Bank (ECB), underscores a growing recognition that physical currency remains a critical component of national crisis preparedness, even as digital payments become increasingly prevalent.
The ECB’s guidance, detailed in a recent publication as part of the ECB Economic Bulletin, Issue 6/2025, highlights a “paradox of banknotes.” While the share of cash in everyday transactions has declined, the overall value of euro banknotes in circulation has actually increased over the past two decades. This suggests that, despite the convenience of digital alternatives, demand for physical currency persists – and even grows – during times of uncertainty.
The advice isn’t merely theoretical. Several recent events have demonstrated the vulnerability of entirely digital payment systems. In January, a major power outage in Berlin left residents unable to use bank cards or access ATMs, with cash becoming the only viable means of payment. Similar disruptions occurred in Spain and Portugal, further illustrating the potential for widespread payment failures in the event of infrastructure breakdowns.
The ECB study points to a fundamental psychological and practical utility of cash during crises. When trust in financial or digital systems falters, individuals often turn to physical currency as a reliable store of value and a resilient medium of exchange. This behavior is not unique to Europe; similar patterns have been observed during crises globally.
Several European nations are already actively encouraging citizens to maintain cash reserves. Authorities in the Netherlands, Austria and Finland recommend holding between €70 and €100 per person – enough to cover essential needs for approximately 72 hours. Sweden goes further, advising households to keep enough cash on hand to pay for food, medicine, and fuel for at least a week. German authorities recommend a reserve of around €500 per family.
The recommended amounts aren’t simply about having money for immediate purchases. The ECB’s research suggests that cash can facilitate “trading purposes” if digital payment methods are interrupted. This implies a potential return to more localized, barter-based economies in the event of a prolonged systemic disruption.
The ECB’s warning comes amid broader concerns about geopolitical instability and the potential for disruptions to critical infrastructure. The war in Ukraine, for example, highlighted the fragility of interconnected systems and the importance of self-reliance. While the ECB doesn’t explicitly link its advice to any specific threat, the timing suggests a heightened awareness of systemic risks.
The increasing demand for banknotes, despite the growth of digital payments, is a notable trend. The value of outstanding euro banknotes has consistently represented over 10% of euro area GDP over the last decade, with a temporary surge during the COVID-19 pandemic. While interest rate hikes have moderated this growth since the second half of 2022, the overall level of demand remains robust.
This sustained demand for cash also has implications for monetary policy. Central banks must continue to manage the supply of banknotes to meet public needs, even as they pursue strategies to promote digital payments. The ECB’s research suggests that cash and digital currencies are not simply substitutes, but rather serve different purposes and cater to different needs.
The ECB’s message is clear: while digital payments offer convenience and efficiency, they should not come at the expense of preparedness. Maintaining a readily accessible cash reserve is a prudent step that individuals and households can take to mitigate the risks associated with potential disruptions to the financial system. It’s a return to a more fundamental principle of financial security – diversification – applied to the very means of payment itself.
The advice isn’t limited to financial preparedness. Several countries, including Germany, also encourage citizens to stockpile essential supplies like food and water, further emphasizing the importance of self-sufficiency in the face of potential crises.
