1
$\begingroup$

An ECB page notes that:

As euro banknotes travel freely across borders, at any one time the number of banknotes in circulation registered at each national central bank can vary enormously. The figure for one bank could even be zero or negative. For example, when German tourists seeking a Latin adventure take euro banknotes issued by the Deutsche Bundesbank with them to Spain, these notes are finally lodged at the Banco de España. As banknote issuance is an entirely demand-driven process, this means that the Banco de España would now need to put fewer notes into circulation because it is benefiting from the notes crossing the Pyrenees. For this reason, the central banks in the euro area balance out the amount earned on banknote issuance among themselves.

How do the Eurozone central banks (yes the plural is correct in this case) do that balancing?

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.