In 2018, individuals in Germany stored an average of €1,364 in cash at home or in a safe deposit box, according to the results of a study published in the Bundesbank’s latest Monthly Report. “The amount of cash held is thus significantly higher than the average amount of €107 that individuals keep in their wallets for daily needs,” explained Johannes Beermann, Bundesbank Executive Board member, at a press briefing.

Since the introduction of euro cash in 2002, the Bundesbank has brought banknotes and coins worth a value of around €780 billion net into circulation. Official statistics on the use and retention of issued banknotes and coins are scarce since cash is anonymous. In 2018, interviews were conducted with a representative sample of 2,000 individuals to learn more about the storing of cash by German households.

Cash holdings depend on age and income

According to the study, the amounts of cash individuals held in addition to the money in their wallets were very unevenly distributed among the population. Mr Beermann added that “while many respondents held no cash or only small amounts, a few individuals reported large cash holdings.” The findings showed that older people, in particular, tended to hold more cash. It was observed that the average cash holdings increased up to the age of 65 before declining again. In the Monthly Report, the Bundesbank’s economists note that high cash reserves shortly before the start of retirement could indicate the accumulation of a reserve for a person’s retirement age, which is slowly reduced after the age of 65. A significant relationship was also identified between income and the amount of cash held. According to the study, the average amount of cash individuals hold beside that in their wallets rises in line with their income. Individuals who are currently in education or training (school pupils, students and trainees) usually have very low cash holdings.

No indications of tax motives

The results of the study suggest that cash is hoarded primarily on account of the low interest rate level (58%) and for practical reasons, such as usability as a means of payment, (55%) and as a “back-up” reserve that is independent of technology (41%). “The German population not only uses cash as a means of payment, but also to a large extent as a store of value,” Mr Beermann explained. Only 12% of respondents considered tax motives to be an important reason for storing cash. According to the Bundesbank’s experts, the study does not provide any indications of tax avoidance as a motive for storing cash. In fact, a lack of trust in the security and robustness of the technical infrastructure – e.g. fear of cyber attacks – appears to be a more important reason for holding cash reserves.