The Future of Cash - RBNZ announces a series of consultations and research reports on the future of cash
29 July 2021
On 7 July 2021, the Reserve Bank of New Zealand (RBNZ) announced that it would conduct a series of public consultations over the course of 2021 on the future of cash (ie is there a place still for cash in the New Zealand market).
The RBNZ will be releasing a series of money and cash issues papers for feedback from August to November 2021 that will address the issues that were identified during the 'Future of Cash Use' consultations in 2019.
While none of these papers have been released yet, we will update this page with developments once these papers start to be released. If you would like assistance with making a submission on any of these consultations, please contact a member of our financial services regulation team.
Future of Cash Use Consultation
In June 2019, the RBNZ published an issues paper on 'the future of cash use' and sought public submissions.
The purpose of this issues paper was to review the role of cash in New Zealand and identify some of the implications of moving towards a society with less cash as well as distinguishing what uses of cash were also met by electronic substitutes and what uses of cash had no adequate substitutes.
The topics of discussion included matters such as the impact on people who may be digitally excluded as well as topics such as the costs of cash infrastructure and reduction of overall transaction cost of payments.
In December 2019, the RBNZ published a summary of responses to the issues paper, with the consultation receiving 2,284 submissions.
Future of Cash System Consultation
In October 2019, the RBNZ published a consultation paper on 'the future of the cash system' and sought public submissions.
The paper proposed that the RBNZ take on a more active monitoring and coordination role in the cash system and be given appropriate information-gathering powers to support this role.
For clarity, ‘cash system’ is the network of businesses that supply, circulate and store cash. The key participants in the cash system in New Zealand are banks, the RBNZ, cash-in-transit operators (ie specialist cash transport and management services), and non-bank ATM operators.
Additionally, the paper proposed two tools that may be needed in the future:
- Giving the RBNZ the power to set standards for machines that process and dispense cash, such as banknote authentication machines in bank branches, ATMs (automated teller machines), and automated self-check-out machines
- Setting out regulation-making powers in the Reserve Bank Act 1989 that enable the Government and the RBNZ to act quickly to require banks to provide access to cash deposits and withdrawals. These powers are only intended to be invoked if there is risk of a significant reduction in access to cash across the country that prevents the public’s needs being met. The paper set out that the proposed role of the RBNZ would be to design the proposed regulation and to provide recommendations and advice to the Minister of Finance (with additional parliamentary oversight).
In June 2020, the RBNZ published a summary of responses to the consultation paper, with the consultation receiving 277 submissions.
The RBNZ has noted that the 'Future of Cash Use' issues paper process made it clear that the cash system remains fit for purpose despite falling transactional cash use and the emergence of new innovations in money. However, the RBNZ noted that the cash system as it stands will not remain sustainable in a world where cash is used less and less and that the cash system requires a broader response with either a series of changes to the cash system or a transformational redesign of the entire system.
To make this decision the RBNZ will undertake a holistic and strategic review of the cash system. As part of this review, the RBNZ will be releasing a series of money and cash issues papers for feedback from August to November 2021 which will address issues identified during the 'Future of Cash' consultation in 2019.
The aim of these consultations is to confirm key issues facing cash and other types of money in New Zealand and possible approaches to addressing these. The RBNZ has stated that it will be considering not only what it should be doing as steward, but what a resilient and stable cash and currency system in New Zealand might look like, and how it might best respond to digital innovations in money and payments.
Content of Consultation Papers
The first consultation will introduce and seek feedback on the broad concepts of money and cash stewardship, and outline specific topics to be covered in the rest of the series.
Subsequent papers will look at:
- The potential for a Central Bank Digital Currency (CBDC) to work alongside cash as government-backed money
- Issues arising from new electronic money forms including crypto assets (such as BitCoin) and stable coins (such as proposed by a Facebook-led consortium), and
- How the cash system might need to change to continue to meet the needs of users.
We will update this page with developments in relation to the 2021 consultations on the future of cash.
If you would like assistance with making a submission on any of these consultations, please contact a member of our financial services regulation team.