Since 2014, the central bank has exchanged more than 317,000 damaged banknotes, worth approximately €13.8 million, many of which were recovered after being hidden underground.

“Most of these notes are ruined by humidity when people bury them,” explained José Luís Ferreira, coordinator of Banco de Portugal’s cash operational area, as reported by Euro Weekly News. “Insects, soil moisture, and time cause irreversible damage.”

While burying cash is the most common reason for deterioration, people have also hidden money in unconventional places—including microwaves, fireplaces, and even septic tanks. Ferreira suggests that this habit often stems from distrust in banks or a desire to be financially prepared for emergencies.

Pandemic-fuelled surge

In 2024 alone, over 40,000 damaged banknotes were exchanged, the highest figure in a decade, amounting to €1.7 million, according to Euro Weekly News. The most commonly damaged notes were €20 and €50 bills. This surge follows a trend that began during the pandemic when people chose to store more cash at home amid uncertainty.

“After the pandemic, we saw people coming in with damaged notes, seeking to recover their value,” Ferreira noted.

Historical events have also contributed to the phenomenon. In 2018, following the devastating wildfires of 2017, over 32,000 notes were recovered, totaling more than €1.7 million. One particularly striking case involved a sawmill owner who lost €40,000 when his safe was destroyed by flames.

Evaluating damaged banknotes

According to Euro Weekly News, the evaluation process for damaged banknotes is stringent and follows Eurozone regulations. “To be refunded, more than 50 per cent of the note must be present and identifiable as genuine,” Ferreira explained.

Portuguese-developed software assists the central bank in analysing damaged currency to ensure authenticity and prevent fraud. “We sometimes receive sophisticated forgeries disguised as damaged notes, but our robust control processes catch them all,” Ferreira assured.

Despite these efforts, the Bank of Portugal continues to advise against keeping large amounts of cash hidden at home—especially underground. “People still believe it’s safer,” Ferreira added, “but it comes at a high price.”