The pandemic's impact on cash usage, along with developments in the creation of central bank digital currencies, has led to renewed speculation on the demise of notes and coins.

Since early last year, the volume of cash being lodged at central and commercial banks has fallen by up to 25% in the euro area. Meanwhile, a survey commissioned by the Eurosystem in mid-2020 showed that around 40% of the respondents were using cash less frequently than before.

However, Panetta told a Deutsche Bundesbank conference that, despite the significant drop in the use of cash for payments, there has been a parallel huge rise in the demand for euro banknotes over the past year: an increase of €190 billion - or €550 per capita - between March 2020 and May 2021.

One possible explanation for this apparent paradox floated by Panetta is that during the crisis people turned to cash as a tool to manage uncertainty.

Listing the benefits of cash, Panetta says that the store of value function guarantees a persistent level of demand for banknotes even as digital payments take off.

Cash is also often the only way to guarantee financial inclusion, as it allows users to make payments at no cost. Meanwhile, cash allows almost anyone - including older people and people with disabilities - to check that the money they are using is genuine.

"Given its many functions, I expect cash to survive the digital revolution and that people will continue to use it for many years to come," says Panetta.

The Eurosystem will work to ensure this, vowing to provide a robust supply of cash, making sure it is accepted at merchants, and working to reduce its environmental footprint.

As for a digital euro, this would be a "complement to cash, not a replacement".