The Reserve Bank of New Zealand s seeking feedback on issues facing the cash system and options to keep Aotearoa’s cash system ‘fit for purpose’.
Options include consolidating public and private cash sector functions into one or more public utilities, banks paying merchants that provide cash out services on their behalf, requiring some merchants and government agencies to accept cash, and requiring banks to provide cash services.
“Today’s issues paper, ‘Future of Money – Cash System Redesign’ reinforces our commitment to keeping cash available for as long as it is needed,” says RBNZ Assistant Governor Christian Hawkesby.
“We’re wanting input to develop the right set of policies to ensure the cash system is resilient and efficient in the face of changes in use and availability. We hope the option set presented today prompts discussion and debate, and identifies gaps or refinements.
“Falling cash use for everyday needs and the retreat from cash services by banks and retailers threaten financial and social inclusion for some, and have the potential to undermine the important role cash provides under-pinning confidence in private money in bank accounts.
“We call this acting as a value anchor. In times of uncertainty, people seek the security of cash – knowing money can be withdrawn from bank accounts into cash provides confidence that money in bank accounts is safe too.”
The Reserve Bank’s consultation outlines a range of external drivers facing the cash system that will lead to significant resilience issues for the cash system if left unchecked. It sets out 16 possible policy responses that could help deliver a fit for purpose cash system and 8 policies that could operate as a coherent ‘bundle’ to appropriately shape incentives and address the Reserve Bank’s objectives.
Future of Money – Cash System Redesign joins issues papers published two months ago (30 September 2021) setting out key concepts feeding into today’s paper, the Reserve Bank’s plans to steward money and cash, and discussing the potential for a Central Bank Digital Currency to be issued along with cash. Submissions close on Monday (6 December 2021) for these. Consultation on today’s issues paper closes on Monday, 7 March 2022.
Hawkesby says the Reserve Bank plans to release a summary of submissions received on all three papers and an indication of next steps before the end of April 2022. “We will firm up proposals up next year following the feedback we’re inviting now and then consult further before making final decisions,” he says.