Improving the efficiency of the handling of cash: ‘Recirculation Paper...

Improving the efficiency of the handling of cash: ‘Recirculation Paper’

An interview with Leonor Machado, Chair of Cash Efficiency Working Group

22 June 18

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Both the usage of cash and the ways in which it circulates still differ between eurozone countries. All participants in the cash value chain can play a role in optimising the cash circle and reducing manual handling. The European Payments Council ( ) has issued a paper to help increase cash efficiency by means of recirculation. We interviewed Leonor Machado, Chair of the ’s Cash Efficiency Working Group, to learn more about improving the handling of cash.

Q.Could you describe the main purpose and conclusions of the ‘Recirculation Paper’?

The ‘Recirculation Paper’ was drafted by the ’s Cash Efficiency Working Group (CEWG) to foster the best and most efficient ways to handle cash in the lower levels of the cash circulation cycle, i.e. consumers, retailers and Payment Service Providers ( ), before currency reaches the level of cash centres and, ultimately, national central banks. Please note that the higher levels of the cash circulation cycle have already been covered under another paper, ‘Improving the Efficiency of the Handling of Cash – Cash Cycle Models’. 

Up to now, the circulation of cash has largely relied on transportation and multiple counting. These characteristics entail security risks and might also have an environmental impact due to longer and more frequent transportation. Furthermore, the way money handling is organised nowadays entails costs and time that could be reduced. We also notice that both the usage of cash and the ways in which it circulates and recirculates differ between eurozone countries

Q. What are the best practices of recirculation? What could stakeholders in society do to better support recirculation? Do you see any obstacles to recirculation?

To improve the present situation, it is important to be aware that practices differ from one country to another and also depend on culture, community or geographical scope inside the country (i.e. rural or urban areas).

Average number of transactions per person per day, by instrument of payment
ECB Occasional Paper Series No 201 / November 2017

We can foster recirculation by having the ability for merchants – for example in a shopping mall –  to replenish automated teller machines (ATMs) on or nearby the premises themselves with banknotes received from their customers under specific security requirements and regulations. Furthermore, machines (vaults) which both have dedicated deposit security measures to keep cash protected (e.g. overnight) and may be replenished/emptied by cash management companies (CMCs) and retailers, may also contribute to recirculation. In this context, experiments could also be carried out by larger retailers to enable smaller ones in their proximity to deposit cash with them. Last but not least, ‘cashback’ could be used by retailers and consumers to further recirculation.

One of the challenges of successful recirculation is detecting and removing stained banknotes from use as soon as possible. Also, the adequate (re)location and distribution of ATMs at the national level could make a difference.

To sum up, addressing the cash recirculation topic at a more societal level creates the opportunity to deliver public access to improved depositing and withdrawal facilities. This means that cash recirculation could be handled more efficiently at the local level.

Q. How would you describe the future of cash? What impact does digitisation (such as mass adoption of connected digital payment services) have on cash?

Despite digitisation and the emergence of new methods, cash remains a very important means of payment. The future of cash involves efficient handling methods that respect the environment, shorten, accelerate and thus optimise the cash cycle and give more importance to the lower levels of the cash management chain.


Finding a balance about when to recirculate, while reaching both retailers and consumers, can significantly contribute to optimising the use of cash in the market, especially with the support of all stakeholders, and with useful tools such as ATMs with cash-deposit and/or merchant replenishment functionalities.


Link to “Recirculation paper”

Infographic: Improving the efficiency of the handling cash: Recirculation

(Click to enlarge and download) 


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