9 factors fueling a surge in cash hoarding

Our relationship with cash has taken on a new, more 21st-century character. In the euro area between 2019 and 2024, for example, the share of cash in day-to-day transactions fell from 68% to 40% in volume and 40% to 24% in value terms.¹ Moving in the opposite direction, though, the value of banknotes in circulation in that period surged by over 28% to over €1.5 billion.² 

Behind this apparent paradox lies a fundamental change in the role that cash plays in the lives of many people. While cash in countries across the world may be ceding part of its historical position as the default means of payment to digital, it is strengthening its position in other ways: as a store of value, as a safeguard for domestic security and resilience, and even as an expression of personal freedom.

So, if people are not using cash as frequently as before, then what is driving the ever-higher demand for banknotes? And why do we still crave cash as the ultimate liquid asset – albeit sometimes stashing it at home under the proverbial mattress rather than in a bank vault or investment product? 

Here are nine standout reasons people are increasingly drawn to holding larger amounts of cash:

1. A universal payment method

People place great trust in cash’s sustained function as a universal payment method. Cash is still universally understood and an (almost) universally accepted intermediary in the exchange of goods and services. While some want to keep more cash on hand as a safeguard, those characteristics of cash also support the financial and social inclusion of groups who find themselves outside of the modern e-payments ecosystem, including the under- and unbanked and the elderly.

Someone with a particularly weak credit score, for example – and therefore with limited or no access to the banking system – may have little option but to rely on cash. Those are not insignificant numbers. In the US, 4.2% (5.6 million) of households were unbanked in 2023.³

And while many older people are digitally savvy and happy to use modern payment methods, there are plenty who count on being able to transact using cash. In the UK, for example, more than 3 million over-65-year-olds are not online, and an estimated 2.4 million say they depend on cash.⁴

 

2. Cash as a public good

With a view to maintaining a robust cash ecosystem, governments in many countries around the world are now supporting the right to use cash and the requirement for businesses to accept cash payments with new laws. That reflects growing consumer expectations in this area. The majority of euro-area consumers (62%) consider it either “important” or “very important” to have cash as a payment option, up from 60% in 2022.⁵

Sweden’s central bank, for example, recently recognized that “the public’s ability to pay in times of crisis and states of heightened alert needs to be strengthened.” Its Payments Report 2025 states that it should be possible for all citizens to be able to pay for goods (or at least essential goods) using cash – or, if available, another offline transaction mechanism.⁶

Uncertainty certainly boosts demand for cash. Academic research spanning multiple decades shows that societal volatility inspires a “dash for cash” Whether it is an economic crisis, political instability, or the threat of armed conflict, people instinctively seek out cash when faced with an unpredictable future. And there is little doubt that the increased desire to hoard cash has been driven in recent times by back-to-back “shocks” such as COVID-19, conflict in Eastern Europe and the Middle East, international trade wars, and more.

In a positive response to such uncertainties, governments around the world have started to advise their citizens to keep a quantity of cash ready at home. They also suggest people use cash in various situations to ensure it remains an available option. 

In 2023, for example, the Oesterreichische Nationalbank (Austria’s national bank) recommended that households put aside an envelope of cash of the value of twice their weekly grocery bill in low-denomination banknotes.⁷ In a similar initiative, following Sweden’s accession to NATO, its defense ministry advised people to keep a minimum of a week’s spending money in cash.⁸

Such moves are also highlighting a previously unnecessary need: to educate younger generations – many of whom have only ever participated in a digital-first world – about the mechanisms and value of using cash. That extends to ensuring both consumers and retail staff are comfortable with handling physical currency – both the physical characteristics of different notes and coins and the characteristics that might distinguish real banknotes from counterfeit ones.

3. A safety net for digital meltdown

More and more people want to keep cash on hand as a precautionary measure, regarding it as providing a reliable transaction capability in the event of a widespread digital payments problem, whether caused by a power outage, cyberattack, financial crisis, or natural disaster. That logic has certainly been reinforced by acute geopolitical tensions in several parts of the world.

But it has also been spotlighted by recent digital infrastructure failures – perhaps most spectacularly the country-wide digital-payments blackout that hit the Iberian Peninsula in April 2025 after the failure of the Spanish electricity grid system. With point-of-sale systems and ATMs out of action for almost a day, cash was the only real means of exchange. 

As it happened, Spain coped with the situation better than some other countries – where the use of cash as a means of payment has dwindled to around 10% of transactions – would have.⁹ In Spain, cash still accounts for about 60% of in-store transactions.¹⁰ As that incident shows, cash today still fulfills an ongoing function as a backstop for when digital infrastructure is compromised and no other offline payment capability is available.

4. A highly liquid and visible way to spend and save

Unlike money in the bank or many other investments – including precious metals – cash is viewed as providing unmatched liquidity and ease of access. That shows in European Central Bank (ECB) figures for how much money people keep on hand. 

The ECB has estimated that for 2019 between 30% and 50% of total cash in circulation in the euro area was used for store-of-value purposes. That would imply that the average cash held per adult across the euro area ranged between €1,270 and €2,300.¹¹ Extrapolating that for 2025, average per-adult cash would now come in at between €1,700 and €3,000

5. The tangibility of physical cash

Unlike electronic payments, cash has physical properties that convey value – visually and tactilely. Handling physical cash has well-documented psychological effects: it can provide a sense of security and convey the inherent value a user has on hand.

According to academic and industry research, the way banknotes are designed – their size, color, powerful imagery, and security features –can determine how their value is perceived by users as well as contributing to the overall aesthetics and haptics of the banknote. Such features provide reassuring measures against the circulation of counterfeit notes and help consumers, merchants, and cash processors to correctly identity and authenticate banknotes.

Cash – and banknotes, in particular – also stand as expressions of nationhood. Along with their robust security features and sophisticated substrates, banknotes invariably tell a story of a country, its people, and its culture through artwork, colors, and detailed design. They usually encompass images of a country’s geographical features, its national symbols, and its head of state. Such design works on another level: it imbues cash with legitimacy and authenticity, fostering trust in a country’s wider financial ecosystem.

But there are some generational shifts underway around how cash is perceived. Baby Boomers (currently aged 61–79) and Gen X (currently aged 45–60), who are less likely to manage their spending via a mobile device, perceive cash differently than younger generations do. Recent research in the US shows that older adults opt for cash transactions more frequently because they see cash as “significantly more transparent, real, harder to forget, and more painful to spend.” In contrast, digital natives view cash and digital payments as equal across all these measures.¹²

6. A gift or way to acknowledge a personal service

Tips, gratuities, and gifts are another factor driving cash’s sustained use and popularity. Even when people pay for some services electronically (for example, a restaurant bill or at the hairdresser’s), they sometimes want to pass on a cash tip to the person serving them to show direct gratitude and ensure the recipient gets the maximum benefit. 

At the same time, many people still want to give physical cash gifts for practical, personal, and traditional reasons. The argument: cash feels more personal and tangible than a digital transfer. That is often the case with gifts to younger family members, who may not yet have a bank account, as well as those celebrating a special event such as a wedding or graduation.

7. The appeal of fee-free economics

No matter how minor, a card or digital payment incurs a transaction fee. Depending on a merchant’s payment processing partner, fees can range widely, but typically they are around 1% to 3% of the transaction value, with smaller businesses paying at the higher end of the fee scale.¹³ The fee is split across a chain that includes the card-issuing bank, the card brand, the acquiring bank, and the service provider.

To avoid carrying such fees, many smaller retailers encourage cash payments and require a minimum purchase amount for customers to use a card or electronic payment, typically around €5 or the equivalent. That in turn encourages their customers to carry some cash – albeit in smaller quantities than in previous decades. 

Cash-only policies, where practical, can also bypass other retailer fees such as the costs of chip-and-PIN machines and point-of-sale tills (including their software and maintenance), fees to maintain a secure network connection, and the cost of compliance with payments standards such PCI. The instantaneous and final nature of cash payments can also help with a business’s cash flow as there is no processing lag ahead of receipt of funds.

Of course, certain business activities – such as window cleaning, babysitting, taxi services, and dog walking – are often paid in cash, and others – such as builders, plumbers, and car wash activities – offer customers discounts for cash payments. Those in turn provide an incentive to customers to hold an appropriate level of readily available cash.

8. A desire for transaction privacy

In an era where personal data breaches are common, cash is seen as ensuring transactions are private and anonymous. Unlike card and digital payments, the use of cash – and its ownership – leaves no financial data trail. Even in technologically sophisticated economies such as Austria, Germany, and Japan, there is still a sustained preference for cash, primarily driven by values and concerns about privacy and security.

It is a view that is widely held: according to a 2024 study by the ECB, the majority (60%) of consumers in the euro area are concerned about their privacy when performing digital payments or other banking activities. In fact, the anonymity and protection of privacy afforded by cash is viewed as the single biggest advantage of using cash.¹⁴ And that sentiment seems to be growing over time. A survey of payment behavior in Germany by the Bundesbank shows the number of people who regard privacy protection as the core benefit of cash has jumped – from 55% in 2021 to 63% in 2023.¹⁵

9. Cash as a route to better budgeting

Cash is perceived by many as a better tool for budgeting. In volatile economic times, households are more careful with their spending and frequently look to allocate certain amounts of cash to different costs and activities, from shopping bills to entertainment. A recent survey of European consumers into the perceived advantages of using cash found they place a high value on how it makes them more aware of their expenses.¹⁶

The role that cash can play in expense awareness is even catching on among Generation Z. Groups within that digitally native generation advocate the practice “cash stuffing.” Popularized on TikTok as a budgeting tool, it consists of putting aside predetermined amounts of cash in purpose-marked paper envelopes and spending those amounts in targeted ways each month.¹⁷

Cash is here to stay

Taken together, these developments have created a renewed consciousness – among governments, banks, businesses, and individuals – that cash is a vital and indispensable aspect of a resilient, fair, and free society. Even as its role is evolving, there are rock-solid arguments for its continued use and for the maintenance of a vibrant and efficient cash ecosystem. And judging from the rekindled enthusiasm seen among many, the rationale for cash is strengthening – not decreasing – over time.

Published: 04/11/2025