Asset euroization

Euro cash holdings

One dimension of asset euroization is the use of foreign currency cash as a safe store of value or as a secondary means of payment. The OeNB Euro Survey provides unique direct evidence on foreign currency cash Holdings (click to expand chart).

  • Frequency of euro cash holdings among residents; left map: average 2007–2012, right chart: biannual averages across time.
  • Amount of euro cash holdings per capita (left panel) and currency substitution index, i.e. the ratio of euro cash holdings to total currency in circulation (right panel), averages

The three main findings of the OeNB Euro Survey on euro cash holdings are:

  • First, the share of respondents holding foreign cash is substantial in some CESEE countries and varies considerably across countries.
  • Second, the currency breakdown reveals the predominant role of the euro in all the countries analyzed.
  • Third, in particular Southeastern European countries which had exhibited a rather high share of euro cash in total currency in circulation in 2007 (currency substitution, see Scheiber and Stix 2009) witnessed a substantial decline both in the relative importance of euro cash holdings in individual portfolios and in the absolute value of euro cash holdings.


  • Share of respondents who have a strong cash preference

Studying the phenomenon of cash preference in greater depth, Stix (2013) shows that a lack of confidence in the banking system (in particular a perceived lack of deposit security) is a key factor in explaining individuals’ strong preference to hold sizeable shares of their assets in cash at home rather than with banks. The recollection of past banking crises aggravates this effect. Furthermore, weak institutional frameworks, e.g. the poor quality of legal enforceability or tax collection, as well as a low penetration of banks, constitute significant factors that explain the strong preference for cash. Finally, Stix (2013) provides empirical evidence that the preference for cash is stronger in euroized economies.


Monetary statistics show that a substantial part of household deposits at banks are denominated in foreign currency, predominately in euro. Yet the question remains: Which households actually hold these savings deposits? The OeNB Euro Survey provides some insights on the overall portfolio structure of CESEE individual savings and the importance of foreign currency deposits or alternative ways of saving, e.g. life insurance, mutual funds, bonds and stocks.

  • Frequency of savings account among residents, multi-annual averages
  • Deposit substitution index, i.e. ratio of foreign currency deposits to total deposits of the household sector, annual averages
  • Hypothetical savings decision: respondents were asked in which currency they would deposit a certain amount of money (comparison of 2011/12 with 2017/18)

Overall extent of euroization

Combining micro data from the OeNB Euro Survey on euro cash holdings and macro data on households’ foreign currency deposits allows researchers to derive an overall measure for the degree of euroization in CESEE economies. This measure is calculated as the sum of euro cash holdings per capita and foreign currency deposits per capita over the total sum of per capita cash holdings and savings deposits (see Scheiber and Stix, 2009). The euroization index turns out to be quite stable, which indicates that persistence of individual savings behavior is high.

  • Euroization index, i.e. ratio of euro cash holdings and foreign currency deposits to the total sum of cash holdings and savings deposits, annual averages