Last year during the first week in December the amount of cash in circulation rose by £100 million (€127 million), according to Central Bank figures.

This year, during the same seven days, the amount of cash in circulation fell by £5 million. The unprecedented negative growth is being attributed by the Bank to the euro changeover and is a pattern being reproduced across the euro zone.

Cash that people had stashed in suitcases, under floorboards and inside pillows is being taken out and spent in the run up to the euro changeover. In some cases the cash has been held for a long time. The Central Bank has noted a large increase in people ringing with concerns about the authenticity of notes bearing the signature of Mr Maurice Doyle, the former governor of the Bank whose signature stopped appearing on notes at the end of April 1994.

Such is the scale of the phenomenon that the amount of cash being sought by the economy from the Central Bank is for the first time ever showing a year-on-year dip.

"What we are seeing is pretty dramatic. The figures have not just fallen off they have gone into reverse," said a Central Bank spokesman. "We would expect to see a large increase in cash demand because it is Christmas, and definitely not a fall-off."

At the end of the first week in December the Bank's figures showed a 4.64 per cent drop in the amount of cash in circulation, when compared with the same week last year.

While the phenomenon is unprecedented it is not unexpected, according to the spokesman. "Dormant cash" is being spent or being lodged to bank accounts. Both mean less demand for cash from the commercial banks, which in turn are making less demand for cash on the Central Bank.

The uprooting of dormant cash has been gathering momentum throughout the year, Central Bank figures indicate. While the year-on-year increase for cash in circulation was 15 per cent for January, it had dropped to 10 per cent by June, 5.6 per cent by September and -1.6 by November. With each day that passes in December the negative figure is increasing. By Monday the figure was -5.09 per cent.

Exactly how much dormant cash is surfacing is impossible to clarify but the amount is significant. The difference in the amount of cash in notes in the economy on the first Friday of December of this year, compared to the same day last year, was £168 million or -4.7 per cent. In normal times a 10 to 15 per cent year-on-year increase would be expected. To achieve that more than £670 million would be required.

One place where some of this money is surfacing is in antique shops and salesrooms where, despite the general downturn in the economy, business is booming with packed salesrooms and buoyant prices.

People who have cash they don't want to lodge in a bank account, perhaps for fear of bringing it to the attention of the authorities, are instead converting it into paintings, antique jewellery and antique furniture, items the purchasers hope will maintain their value in the years ahead.

A recent advertisement placed in The Irish Times by a Dublin antiques shop opened with a reminder to readers that the euro changeover was coming.

"There is a lot of it going on," said one Dublin auction room owner.

"People are offloading cash, it's slushing around and it has been gathering momentum over the past six months."

The source, who did not want to be named, said the normal ratio for sales in his show rooms would be 70 per cent cheques to 30 per cent cash but this had been changing over recent months and is by now reversed.

Not only is the surfacing of dormant cash leading to increasing numbers of sales being settled in cash, according to the source, but it is also affecting prices. "The price of everything has gone up, for no logical reason."

The source said the cash settlements he is talking about are for transactions of up to £5,000. Another source, with an auction room in the south-east, said he is making cash sales for up to £40,000.

"There is supposed to be a recession out there but I wouldn't get a sense of there being a recession out there at all."

The source added that he would be concerned at how the scene will change after February 9th, when the punt will no longer be legal tender.

Asked what £30,000 to £40,000 in cash looks like, the source said it was was not a large lump of money when properly packed. "Just three or four bricks of money. I've seen a suitcase full of new notes and £20,000 taken out of it and it didn't make a dint. It was pocket change."

"This is not dirty money, not drugs money or anything. These would be reputable clients."

Another source, a senior figure in the Dublin art and antiques sector, said he had "no doubt" people wanting to get rid of cash were buying antiques and art.

"If you go to a bank you have to fill out forms and so no-one with any sort of money is going to do that. If you go to Francis Street \in Dublin\ you can buy a good dining-room table, or some jewellery or silver.

"In Northern Ireland and in England there's a downturn \in the art and antiques sector\ but there's no indication of that over here. There is cash around."

It is generally accepted that large cash payments are also occurring in retail outlets generally and especially for luxury items.

Earlier this month investment bank UBS Warburg predicted that the approaching euro changeover would lead to a euro-zone wide spending boom as consumers used hoarded cash to buy Swiss watches, jewellery and fine wine.

The investment bank told clients that quoted companies such as Swiss watchmaker Swatch, French drinks group LVMH, and Italian jeweller Bulgari could benefit in the run-up to the changeover.

Up to £870 billion in cash is believed to have been hoarded by consumers across Europe, mainly to avoid paying taxes.

The increased use of cash to buy items in retail outlets is being noticed by the Irish banks, who are finding that retailers are making less demand for cash than would normally be the case at this time of year. This in turn leads to less demand from the Central Bank.

Not all people with hoarded money are spending it. Some are lodging it to their bank accounts, a factor again leading to reduced demand on the Central Bank. "Overall the general trend down the year is for an increasing flow of funds back into the system," said a spokesman for AIB. He said cash in the other currencies joining the euro was also being brought to the banks. The bank has also noticed a reduced demand for the filling of ATMs.

"There is less demand for us to stock the system" due to dormant cash being re-introduced, according to the spokesman.

The phenomenon is expected to be increasingly noticeable as February 9th approaches.

Euro Countdown, Business This Week 2