The role of currency

What is money?

Money traditionally fulfils three functions:

  • a means of exchange, money enables commercial transaction or transactions between individuals to be paid for. It can be exchanged for goods or services. It has an immediate discharging power;
  • a unit of account, it enables prices to be established thanks to a recognisable unit accepted by all. It enables the relative value of goods and services to be compared;
  • a reserve value, it can be saved and used to keep or transmitted over time.

Whereas the value of money was in the past backed by the value of precious metals, it is today guaranteed by the central banks. It is the trust between citizens and institutions which gives its value to money: we speak of fiduciary money.

The euro has been the only legal tender in France since January 1st, 2002. The Banque de France and the European Central Bank are guarantors of the value of the European currency. 

Used every day by nearly 340 million people, the euro facilitates economic movements and exchanges. It has enabled prices and exchange rates to be stabilised, and low interest rates to be guaranteed.

Cash – key figures

1,575 billion euros in circulation in the eurozone in December 2021
Of which 31.2 billion in coins (ECB)

59% of transactions in France paid for in cash
73% in the eurozone (ECB, SPACE study, 2019)

79% of French people are against the disappearance of cash (IFOP, 2020)

To find out more

Marc Schwartz, Chairman & CEO of Monnaie de Paris has written a reference study on the place of cash in the world, Le grand paradoxe – ou pourquoi le règne du cash est loin de s’achever (The great paradox - or why the reign of cash is far from over). The latter demonstrates in particular that the volume of cash in circulation is constantly increasing, and that cash plays an important role as a means of payment. It also illustrates that if the death of cash was announced, there are many arguments in favour of cash. It is strongly defended today. Lastly, this study envisages the implementation of a digital currency which might present the same advantages as cash.

To consult the whole of this work:

 

Key figures and reference information on fiduciary currency are also provided by the Banque de France:

 

And by the European Central Bank: