Paper production, transportation, electricity consumption for authenticity checks and the operation of ATMs or waste products generated during processing by cash-in-transit companies and credit institutions: This list suggests an huge ecological footprint for banknotes. But if you think about the sometimes worn-looking bills in your own wallet, you will quickly find a counter-argument. Banknotes have a long lifespan. A study by the European Central Bank shows what the bottom line is in terms of their environmental footprint.
Regularly in view: Environmental impact
At the end of 2023, the European Central Bank (ECB) published a study on the environmental impact of euro banknotes. The focus was on the entire life cycle of a banknote, from the procurement of raw materials and production to the distribution and circulation of euro banknotes and their incineration at the end of their life. In order to evaluate this network in a meaningful way, the ECB relied on the European Commission’s Product Environmental Footprint (PEF) method. Its advantage: the standardized approach for different products and activities allows comparisons to be made. More on this later.
For the first time, the European Central Bank has not scrutinized its banknotes in recent years. Back in 2004, the bills had to undergo a life cycle assessment. The results at that time showed initial potential for optimization, which those responsible implemented, for example, by switching to sustainable cotton for the banknote paper (Sustainable Cotton Program). However, the two studies cannot be compared as they are based on different research units and methods.
A question of comparison
But what was the final result of the study, which refers to the year 2019? What is the size of the ecological footprint of euro banknotes? The answer: quite a small one. The comparisons already mentioned help here. The environmental footprint resulting from the use of banknotes per person and per year is equivalent to an eight-kilometer car journey. The environmental impact of EU banknotes accounts for only 0.01 percent of the annual consumption behavior of an EU citizen.
To return to the scientific side of the equation:
- – The environmental indicator that can be calculated using the PEF method is 101 µPt (micropoints) for the annual cash payment per person in the euro area.
- – The total annual environmental impact per person is 1,003,686 µPt.
This comparison is also made clearer by the journey metaphor. The annual environmental impact of an EU citizen can be converted into 79,575 kilometers of driving, which is almost equivalent to two trips around the world.
The question of whether banknotes are more environmentally friendly than other means of payment has not yet been resolved. Comparable analyses of alternative payment options are lacking here.
Cash: More than ecological!
However, the ECB is not resting on its laurels. The aim is to continue to offer cash as securely and sustainably as possible while ensuring its availability and public accessibility. For all those who are happy to hear that cash performs well ecologically: It can do even more! Security, transparency and efficiency can be easily integrated into cash management with the right digital software support. Whether at the point of sale, when it comes to cash recycling or cash logistics and traceability – there are many useful starting points.
Environmentally friendly, secure, transparent, efficient: discover what cash can do!
