Euro becomes majority currency as pound takes a back seat in Republic

The amount of euros in circulation has for the first time surpassed the amount of pounds in circulation, according to latest figures from the Central Bank of Ireland. At close of business on Thursday, the Central Bank had issued 148 million euro banknotes and 1,011 million euro coins with a total value of €2.942 billion (£2.315 billion), writes Ciaran Brennan..

The corresponding value of pounds in circulation was €2.717 billion - a fall of 42 per cent from December 21st, 2001.

The strongest decline has been in £20 notes, where circulation has fallen by 50 per cent. Circulation of the £50 note has fallen by 44 per cent and the £10 note by 42 per cent. The £5 note is down by 30 per cent, while the £100 note, which is not frequently used in everyday transactions, is down 18 per cent.

Of coins in circulation, 12 per cent has been withdrawn, with the £1 coin having the highest withdrawal rate.

The Central Bank said it had started issuing €200 and €500 notes into circulation. However, given their high value and low demand, they are not widely available - but can be obtained at banks on request, according to the Bank.

Over the past number of days, small amounts of €5 notes have returned to the Central Bank, which it said indicated that the pattern of banknote circulation is returning to normal as retailers and customers begin to lodge euros with their banks.

The Irish Bankers' Federation has estimated the State's bank branches may have served as many as two-thirds of the adult population in the first five working days of the euro, when some two million transactions were conducted.

With euros now accounting for nearly 52 per cent of the currency in circulation, the Republic continues to outpace other euro-zone states.

In its latest update, the European Central Bank (ECB) said the value of euro banknotes in circulation had reached 50 per cent of the total value of all banknotes in circulation, including national banknotes issued but not yet redeemed by national central banks.

"We have clearly reached a key milestone in the euro cash changeover, which marks the disappearance of the legacy currencies," ECB executive board member Mr Domingo Solans said.

Nearly 85 per cent of cash payments were being made in the single currency, according to the ECB. The proportion is even higher in the Republic, the Netherlands, Finland and Luxembourg and topped 70 per cent in every member-state of the euro zone.

The ECB said the total value of national banknotes in circulation had fallen by €9.6 billion - or 4.8 per cent - to €190.6 billion. It said the relatively high value of national notes in circulation was due to the time required by commercial banks to return notes to central banks.

This time lag has squeezed the money market, driving up overnight euro rates to well above the ECB's 3.25 per cent minimum bid rate at its weekly refinancing auctions, with banks not able to balance their books by turning in legacy currency as fast as customers have been withdrawing euros.

The ECB came under fire from some money market traders, who accused it of being too stingy when providing commercial banks with additional liquidity to help smooth out some of the wrinkles caused by the biggest monetary changeover in history. - (Additional reporting, Reuters)