Money and payments
3.3 Banknotes and cash supply
The Bank of Finland is responsible for the issuance and wholesale distribution of cash in Finland, ensuring the availability of cash and the possibility to use it in retail payments.
The Bank of Finland monitors and contributes actively to the development of various payment methods in the Eurosystem and ensures their security in Finland.
Cash distribution channels have continued to perform reasonably
The distribution network for cash has remained good relative to the demand. The number of ATMs increased in 2019 by 145, and at the end of the year stood at 1,751. The results of the Bank of Finland's consumer survey in October 2019 showed that two-thirds of respondents were satisfied with the coverage of the ATM network (Charts 13 and 14).
Banks are, however, continuing to decrease the availability of cash services at bank branches. The availability of cashback services and local circulation of cash at nearly 3,000 retail stores has increased in euro terms and has compensated for the shrinkage of other cash distribution channels. Nevertheless, according to customer feedback, problems with the availability of cash are increasingly being witnessed in rural areas.
Issuance of EUR 500 banknotes discontinued in early 2019
The Bank of Finland discontinued the issuance of EUR 500 banknotes in February 2019, in line with the majority of other euro area central banks. The Austrian and German central banks were granted exemption to continue issuance of EUR 500 banknotes until May 2019. The demand for EUR 500 banknotes has been compensated mainly by orders of EUR 200 banknotes (Chart 15). Since issuance was stopped, the return frequency of the EUR 500 banknotes has decreased slightly.
The steady flow of returns indicates that EUR 500 banknotes have been used not only for cash savings but also for larger cash payments. In 2019, EUR 500 banknotes were returned to the Bank of Finland to a net value of over EUR 200 million.
Orders and returns of EUR 100 banknotes have remained largely unchanged, and the denomination is still returned, in net, to the Bank of Finland via cash payments by foreign tourists in Finland.
Contactless payment has reduced volume of cash payments in Finland
Issuance of EUR 50 banknotes, which account for a major share of Finnish consumers’ cash withdrawals, reached record levels in 2019. Annual growth in the issuance of this denomination totalled EUR 850 million (Chart 16). The EUR 50 banknote is a common ATM denomination and is often taken abroad by tourists.
Annual growth in the issuance of EUR 20 banknotes has also remained steady, at some EUR 100 million. Issuance of EUR 5 and EUR 10 banknotes, which are used as change, has remained unchanged. Rapid contactless payment has, however, replaced smaller cash payments.
Closure of Oulu regional office reduced banknote orders and returns
The Bank of Finland’s regional office in Oulu was closed down in March 2019. This has been reflected as a decrease in the volume of banknote orders and returns. A similar decline in orders and returns was witnessed after 2012, following the closure of the Tampere and Kuopio offices (Chart 17).
The checking for authenticity and condition which ended with the closure of the regional office in Oulu has been replaced by sorting and overnight custody storage at the premises of cash supply companies. The increase in banknote storage has been reflected as a slight growth in banknote sorting and circulation by private companies.
Banknote sorting decreasing, local circulation increasing
Banknote sorting by both the Bank of Finland and cash supply companies has decreased, due to the decline in the use of cash as a domestic payment instrument (Chart 18). The share of the private sector in the total volume of banknote sorting has remained at approximately 60% in Finland. In sorting by private companies, the share of banknote recirculation has, however, increased over the years, to some 80%.
Local recirculation of banknotes increased in 2019, due to the introduction in March of the custodial system Notes Held to Order (NHTO). In the NHTO custodial system, the parties involved in cash supply can place banknotes into custody in cash distribution centres overnight without interest charges. This procedure is similar to the returning of cash to the Bank of Finland, but without the transportation costs.
Counterfeit euro cash in Finland
The number of counterfeit euro banknotes detected in circulation in Finland remained virtually unchanged in 2019. In total, 980 counterfeit banknotes and 952 counterfeit coins were found (Chart 19). Of the different denominations of banknotes in circulation, the EUR 50 was the most frequently discovered counterfeit note.
The number of counterfeits detected in circulation is still low compared with other euro area countries, as retailers often check the authenticity of euro banknotes very carefully.