"9.7%: Euros in circulation as a percentage of euro area M2
Let’s say you lived in a European country where there the possibility of a euro exit was becoming less remote by the day.
Thinking that through, you might worry that the euros you have in the bank might suddenly be converted into a currency of uncertain value that we will call the lirchma. You might also worry about your ability to access your cash in any form, since your country’s financial institutions might have to shut down for a while as they tried to get clarity on what the new currency is worth, sort out contracts — and prevent a bank run from depositors rushing to pull their lirchma and convert them into euro.
It’s an exercise that might convince you to hold a few more cold, hard euros in cash.
And indeed, Europeans’ preference for cash in hand over cash in the bank seems to be growing. In September, currency in circulation accounted for 9.7% of euro area M2 — a money supply category that also includes close substitutes for money such as savings accounts, checking deposits and retail money market funds. That is up from 8.9% at the start of 2009.
The other thing to do if you were worried about your country exiting the euro would be to put your money in another country. There’s some of that going on as well."
at http://blogs.wsj.com/economics/2011/11/19/number-of-the-week-more-stress-more-physical-euros/?mod=WSJBlog
Let’s say you lived in a European country where there the possibility of a euro exit was becoming less remote by the day.
Thinking that through, you might worry that the euros you have in the bank might suddenly be converted into a currency of uncertain value that we will call the lirchma. You might also worry about your ability to access your cash in any form, since your country’s financial institutions might have to shut down for a while as they tried to get clarity on what the new currency is worth, sort out contracts — and prevent a bank run from depositors rushing to pull their lirchma and convert them into euro.
It’s an exercise that might convince you to hold a few more cold, hard euros in cash.
And indeed, Europeans’ preference for cash in hand over cash in the bank seems to be growing. In September, currency in circulation accounted for 9.7% of euro area M2 — a money supply category that also includes close substitutes for money such as savings accounts, checking deposits and retail money market funds. That is up from 8.9% at the start of 2009.
The other thing to do if you were worried about your country exiting the euro would be to put your money in another country. There’s some of that going on as well."
at http://blogs.wsj.com/economics/2011/11/19/number-of-the-week-more-stress-more-physical-euros/?mod=WSJBlog
