The euro is a unit, not one kind of object
When somebody says, “I have one hundred euros,” they may mean notes in a wallet or a balance in a bank account. Both are measured in the same currency and can be used to pay, but legally and on a balance sheet they are not identical. A banknote is central-bank money; a deposit is the customer's claim on a particular commercial bank.
A common price label therefore hides a layered system. A merchant accepts an account payment much like cash because banks, payment networks, supervision and settlement rules aim to keep one euro of deposits ordinarily exchangeable for one euro of cash. That convertibility is an institutional achievement, not a physical property of a number on a screen.
Central-bank money has two main forms
Banknotes are its most visible form for the public. Euro-area member states legally issue coins in volumes approved by the ECB. Eligible banks also hold electronic balances at euro-area national central banks. These balances are reserves, used for interbank settlement, monetary policy and liquidity management.
Reserves are not ordinary household accounts. The balance shown in a customer's app is not automatically an equal amount of reserves set aside in that person's name. The bank records a liability to the customer while managing reserves, cash and other assets for the institution as a whole.
- cash: physical money available to the public
- reserves: electronic central-bank money for eligible institutions
- bank deposits: commercial-bank money used by households and businesses
Most money used for payments consists of bank deposits
A commercial bank mainly creates a deposit when it grants a loan and expands both sides of its balance sheet. The deposit can be transferred by card or bank order, withdrawn as cash and held under the account's terms. Its reliability rests on the bank's assets, capital, liquidity, regulation and ability to settle payments.
Statistics therefore use several monetary aggregates. A narrow aggregate includes the most liquid forms, while a broader measure may add time deposits and certain readily marketable instruments. The boundary between money and “near money” depends on the definition and on how quickly, cheaply and safely an asset can be used.
Where Bitcoin fits
Bitcoin held in self-custody is neither a claim on a bank nor a central-bank reserve. The network records spendable outputs under protocol rules, and authority to spend is proved with a cryptographic signature. A bitcoin balance at an exchange, however, is generally a claim on the operator until the user withdraws it to a wallet they control.
A different architecture does not make either system the automatic winner at every job. Bank money provides credit, some reversals and legal protections; Bitcoin lets a person hold and transfer a digital asset without a bank liability. A useful comparison must always name the particular layer and property being assessed.