Banks, Estonia, Financial Services

Banknotes worth 249 mln euros were returned to the central bank during the quarter.

"Over the quarter as a whole, the number of banknotes issued by the Bank of Estonia as a net issue has decreased by 23 % compared to the previous quarter, which partly reflects the effect of the measures introduced to limit the spread of COVID-19," Martti Naksi, cash analyst-expert at the central bank, said.

He added that the highest demand continues to be for 50-euro banknotes, which account for about 46.7% of all banknotes issued.

"Cash demand has been stable despite the effects of the coronavirus. A study by the European Central Bank (ECB) found that 67% of people's payment behavior has remained the same as before the virus outbreak," Naksi said.

According to the analyst, the ATM network has not changed much in recent years. There are 737 ATMs in use in Estonia, of which 207 can be used to deposit cash. Cash can be exchanged at 29 offices.

In the third quarter of 2020, cash was withdrawn from ATMs 7.4 mln times and in the extent of more than 953 mln euros. These figures have increased by 21.5% and 14.6%, respectively, compared to the previous quarter. Cash deposit transactions were made 1.4 mln times in the third quarter and totaled 497 mln euros.

Naksi noted that the results of the payment behavior survey conducted at the end of 2019 showed that the availability of cash has improved compared to two years ago. Cash withdrawal from a store cash register or bank branch is used equally by 4% of the population. In the third quarter of 2020, cash was withdrawn from a store more than 44,000 times, totaling approximately 2 mln euros.

The central bank issues circulation coins according to demand. In the third quarter of 2020, 6.7 mln coins worth 2.2 mln euros were issued and 621,000 coins worth 528,000 euros were returned. Altogether 44% of the issued coins were one- and two-cent coins.

The Bank of Estonia still exchanges Estonian kroon banknotes and coins for euros. In the third quarter, 204 swaps were made and approximately 57,000 euros worth of kroons were exchanged.

Altogether 28.5 mln banknotes and 320 mln coins with a total value of 44.5 mln euros have not been returned from circulation. Although over time, some of the kroon cash in circulation has been permanently lost or destroyed, residents still have the opportunity to exchange it for euros.

The central bank exchanges ruined and damaged euro banknotes and coins. In the third quarter of 2020, 52 expert examinations were performed, during which the authenticity of 1,034 banknotes was analyzed and the extent of cash damage was determined.

Banknotes that are more than 50% preserved are subject to exchange. Damaged banknotes are withdrawn from circulation and destroyed.

According to the Estonian Forensic Science Institute, 104 counterfeit euro banknotes were registered in Estonia in the third quarter, most of which were 10- and 50-euro banknotes. During the same period, 15 counterfeit coins were detected.

"The number of counterfeits detected in Estonia is marginal both in absolute terms and compared to genuine banknotes and coins in circulation," Naksi said.